President’s Reports

President's Report

Capital Credit Returns Reflect Co-op Success

CEO Dave MarkhamIn mid-December, the Central Electric Cooperative Board of Directors returned $4 million in capital credits to current and former cooperative members who bought electricity in 1996. The ability to return this money is due to CEC’s financial strength–a direct reflection of efforts by the board of directors and employees to manage your cooperative efficiently.

Annually, after all operating expenses are paid, CEC’s remaining margins are allocated to members’ capital credit accounts based on the amount of electricity they bought throughout the year. After an extended period–historically within 25 years, based on the cooperative’s financial condition–capital credits are returned to members in the form of a check.

Since 1958, CEC has returned more than $40 million to members. In fact, capital credits have been returned every year since 2001 and in 38 of the past 41 years.

Capital credits are just one of the many benefits a CEC member-owner enjoys. As a not-for-profit electric utility, we focus on the quality of service, not profit. Members may participate in a democratic process to choose their respective board directors. Members may also benefit from our donations of time and funding to various organizations in local communities.

You enjoy the benefit of clean energy that is nearly 96% carbon-free, reliable and affordable, with some of the lowest electric rates in the state. On average, CEC’s residential rates are 15% lower than the local investor-owned utility’s comparable residential rate. There will be no change in CEC’s retail rate this year.

Successfully keeping our rates low relies on our members and their investment in the cooperative. As a not-for-profit, CEC has limits to obtaining funding for capital projects. We can borrow money from banks with interest or borrow funds from members through rates. Sometimes, CEC uses a combination of both options, but the latter enables us to keep borrowing costs and your rates low.

Over an extended period, CEC uses these funds to pay for long-term projects to maintain and upgrade the electric system. The effort proves challenging. Central Oregon is growing steadily, and the demand for electricity comes with ensuring reliability, enhancing safety and reducing threats to communities in high-risk wildfire areas.

Toward that end, we have strategically expanded substations to increase capacity to meet growth while replacing underground distribution cables in conduits to enhance reliability. We continue to upgrade outdated poles, aggressively expand wildfire mitigation practices such as tree trimming and vegetation management, and install specialized equipment on distribution and transmission lines in high-risk fire areas to protect members and their communities.

None of this is possible without our employees’ daily efforts to manage costs and operate the utility efficiently, led by the board of directors’ vision and guidance. Collectively, we work to ensure CEC members’ money is spent judiciously and provides the highest value.

If you have any questions about capital credits, please call one of our customer service representatives at 541-548-2144 or visit www.cec.coop/customer-service/capital-credits to learn more.

 

President's Report

A Year of CEC Highlights

CEO Dave MarkhamDuring another year in the grip of COVID-19, Central Electric Cooperative experienced challenges and successes worth highlighting.

When the first case of COVID-19 showed up in Central Oregon, CEC prioritized members’ and employees’ safety by continuously adapting and implementing new business practices. I am proud of our employees and their ability to adjust to the changing business environment while maintaining the service levels our members expect.

While these practices seem to be the new norm, this year brought the pandemic’s cascading effects into focus. Like most businesses, we dealt with significant supply-chain delays and shortages in contract labor, but employees found creative solutions to the challenges to minimize the impacts to members.

An early wildfire season started with the 6,000-acre Grandview Fire northeast of Sisters. CEC stood ready, having developed and finalized a Public Safety Power Shutoff plan earlier in the year as part of its wildfire mitigation plan. Thankfully, we did not need to execute it.

Our wildfire mitigation protocols required using more sensitive settings on-field equipment in high-risk wildfire areas during the fire season, resulting in a greater number of power outages and for longer periods. Line personnel had to visually inspect entire sections of power lines before reenergizing to ensure nothing was in the power line to start a fire. The trade-off helped ensure public safety in high-risk areas.

CEC became the first co-op in Oregon to install distribution fault anticipation technology on power lines in high-risk wildfire areas. The groundbreaking technology detects low-level electric disturbances caused by weather, foreign objects in contact with the power line or deteriorating equipment, relaying the information to us so we can fix the equipment before it fails—another measure to protect against wildfires.

As Central Oregon’s population grows, CEC anticipated members’ increasing interest and demand for electric vehicles. This summer, we rolled out our EV rebate program, which offers rebates for members who own an EV and install Level 2 chargers. I am pleased with the positive response. We look to build on the program’s initial success.

Lastly, a federal judge paused Gov. Kate Brown’s lawsuit asking for maximum water spills on the lower Columbia and lower Snake River dams. If successful, it would likely cost Pacific Northwest consumer-owned utilities $100 million or more a year, with an immediate 5% rate impact in 2022.

Almost all parties involved agreed to a temporary settlement, putting a nine-month hold on litigation until a long-term solution materializes.

Consumer-owned utilities will not incur any rate increases in 2022 due to the lawsuit. The Bonneville Power Administration will absorb cost increases incurred by the lost energy production due to additional water spills as part of the temporary settlement.

While we don’t know what is in store for 2022, you can be confident CEC is doing all it can to anticipate and prepare for whatever may come our way.

From everyone at Central Electric, we wish you a happy holiday season.

President's Report

We Appreciate Our Veterans In Word and Deed

CEO Dave MarkhamVeterans Day is November 11, and this month’s magazine honors Central Oregon’s veterans. We understand the debt owed to these men and women and want to recognize and show our appreciation with not just words, but deeds.

For that reason, Central Electric has worked with Honor Flight of Central Oregon and is partnering with Bend Heroes Foundation and its newest initiative, Central Oregon Veterans Village.

CEC’s involvement in these endeavors is consistent with the co-op’s commitment to one of its seven guiding principles: Concern for Community. This concern is rooted in the belief that the cooperative works for the sustainable development of the communities and members we serve.

Bend Heroes Foundation developed a program to address the veterans’ homeless crisis in Central Oregon, combining the best attributes of two successful programs in Clackamas County and Kansas City, Missouri. The Central Oregon Veterans Village will consist of 15 tiny houses—of which CEC funded one—and a community center. The temporary housing will include help for veterans to find gainful employment and eventually transition into long-term housing. To learn more about this project, see pages 4 and 5.

Many of you are likely familiar with the Honor Flight of Central Oregon program. After taking a two-year hiatus due to COVID-19, the program resumed flight this year, enjoying much local media coverage. In September, 28 veterans of the Korean War and Vietnam War made the flight to Washington, D.C., to visit many famous memorials— including those dedicated to the conflicts they participated in—and Arlington National Cemetery.

This trip is often one of a lifetime for these veterans who answered their nation’s call to go halfway around the world to defend the free world. We owe much to these veterans, and they deserve to be honored for their sacrifices. CEC is proud to have sponsored six of the 28 veterans who are co-op members. See page 8 to read more about this trip.

November is also when we celebrate Thanksgiving and reflect and express gratitude. Enduring and working through a pandemic brings greater awareness to what we can sometimes take for granted, such as family, good health and employment.

As CEO and president of Central Electric, I want to take a moment to express my appreciation and thankfulness for the co-op’s employees. They have demonstrated a get[1]it-done attitude without sacrificing the quality of service expected by members while dealing with the adversity and disruption imposed by COVID-19.

On behalf of our employees and board of directors, I wish you a safe and happy Thanksgiving.

President's Report

Stay Comfortable While Keeping Bills Under Control

CEO Dave MarkhamAs cooler temperatures descend upon us this autumn, the extreme summer heatwaves will not soon be forgotten. Record-breaking temperatures strained those living in homes without air conditioning, leaving many to look for temporary solutions to keep cool.

Winter is right around the corner. Living in the high desert brings abrupt swings in temperatures and long stretches of snow and freezing temperatures. For many, it means long, cold and uncomfortable days, putting health at risk because many people do not have the financial means to pay typically higher energy bills in the winter.

Central Electric Cooperative excels in helping members in financial need pay their energy bills during extreme weather periods. Thanks to federal aid through the CARES Act and Energy Assistance Stability Coronavirus Relief program combined with regional organization NeighborImpact and CEC’s Project Helping Hand, we helped members receive $238,854 in financial assistance in 2020.

However, this financial assistance is only temporary and not a long-term solution. CEC has other ways to help members. Partnering with NeigborImpact and the federal Bonneville Power Administration, CEC can direct and guide members through various energy-efficiency programs to keep your home warmer during winter and cooler during summer or years to come while saving you money in the long run.

Working with BPA, CEC has developed 16 energy-efficiency programs to help all members, from enhanced new construction standards to high-efficiency heat pumps and water heaters.

Of those, I want to highlight our low-income ductless heat pump program.

Ductless heating and cooling systems distribute warm and cool air more evenly and are two times more efficient than electric resistance heating. The program, which started in 2015, fully pays for ductless heat pumps. By year’s end, nearly 100 qualified low-income members will have had free ductless heat pumps installed since the program’s inception.

Candidates who qualify typically have as their main heating source an electric furnace, wall heaters, baseboard heaters, plug-in heaters or another form of electric resistance heat. On average, members who install the ductless system have cut approximately 25% of their winter electric bills.

Another option is NeighborImpact’s weatherization program, from which many CEC members have benefited. It provides free services to income-qualified renters or homeowners. The program focuses on enhancing the building shell and improving its energy efficiency, including ceilings, floors, ductwork and insulation.

To learn more, please call Central Electric at 541-548-2144 to speak with an energy specialist. They can determine the best path forward by answering your questions and performing an energy audit at your home if needed. If you qualify for a low-income program, they can connect you with NeighborImpact.

Working together, we can help improve members’ quality of living no matter what weather the seasons bring.

President's Report

A Balanced Approach is Needed, Not More Litigation

CEO Dave MarkhamNot a day goes by that I don’t consider the cooperative’s long-term future and the ability to continue delivering our members clean, reliable and affordable energy.

Central Electric Cooperative relies on the federal Columbia River Power System for nearly all of its wholesale electricity. However, this renewable, carbon-free resource faces many external pressures undermining its value. The 20-year legal wrangling over federal agencies’ management of its hydropower system is one such pressure.

This summer, Oregon and special interest groups asked a federal judge to dismantle a 2018 flexible spill agreement negotiated by federal agencies, tribes and states seeking to balance the needs of salmon and electric ratepayers.

The federal agencies adopted the flexible spill agreement in its 2020 CRPS’ environmental impact statement. Oregon— which filed a lawsuit challenging the EIS in March—joined a separate legal effort in July to overturn the flexible spill agreement.

The lawsuit asks for maximum water spills on the lower Columbia and Snake River dams to aid fish migration for spawning. The round-the-clock spills would bypass the dams’ turbines and not generate electricity during critical months.

This questionable experiment will disproportionately favor fish with no guarantee of success at the expense of the region’s collective interests. It will adversely affect electric rates and grid reliability and further undermine the Columbia Basin Collaborative, created by the governors of Oregon, Idaho, Montana and Washington to find a comprehensive working solution.

Yes, Oregon is part of the CBC while simultaneously engaged in two legal actions against the federal government.

If Oregon’s lawsuit proves successful, the maximum water spill will cost the Pacific Northwest consumer-owned utility ratepayers up to $100 million, with an immediate 5% rate increase in 2022. It will also force dependence on more carbon-intensive energy market purchases to replace lost hydropower at a higher cost.

The lower Snake River dams played a critical role in keeping the lights on for millions of consumers during recent extreme weather events. The dams were a crucial energy source during last winter’s Willamette Valley ice storms and the recent heat waves that scorched Oregon.

Taking this generation offline will increase the risk of Northwest blackouts from 6.6% to 30%. This equates to blackouts every three years, which is unacceptable. Oregonians should be concerned, given recent blackouts in Texas and California.

Let’s not lose sight of the plaintiff’s overall goal: removing the lower Snake River dams. The most recent legal action, if successful, is only a stop-gap measure. As expressed in the motion, the maximum spills are only an intermediate step “until there is a comprehensive solution that includes restoring a free-flowing lower Snake River.”

Believing we can do better, I added my name to a multi-signatory letter to Gov. Kate Brown. The letter urges a comprehensive, balanced approach; foregoing the endless litigation to dictate a preferred outcome; and letting the CBC do its job.

Winston Churchill once said, “Never give up on something that you can’t go a day without thinking about.”

For me, that definitely rings true today and every day.

To learn more about the lower Snake River dams’ role in keeping the lights on, please see the article on pages 28-29.

President's Report

Legislature Addresses Clean Energy, Wildfires

CEO Dave MarkhamA sweltering June Saturday in Salem, where temperatures soared to an all-time high of 103 degrees, seemed a fitting backdrop to conclude an extraordinary state legislative session.

The state capitol’s doors were closed to the general public throughout the session due to the pandemic, leaving legislators to conduct much of their business virtually.

Under these unusual circumstances, the Legislature passed significant bills that will affect the utility industry for years to come.

After a decade of numerous attempts to pass significant clean-energy legislation in various forms, enough votes materialized to pull House Bill 2021—100% Clean Energy for All—over the finish line.

HB 2021 requires investor-owned utilities to transition to a 100% clean energy portfolio by 2040, with intermediate targets of 80% by 2030 and 90% by 2035. Consumer-owned utilities are exempt due to heavy reliance on the Bonneville Power Administration’s hydropower, which is 100% renewable energy.

The goal raises serious questions about long-term resource adequacy needs. Wind and solar should play an instrumental role in an all-of-the-above energy resources strategy, but are insufficient to serve as the backbone to the state’s energy supply. They cannot generate power consistently, often when needed most.

Yet this is where HB 2021 is taking us. One of the bill’s provisions prohibits sitings of any new gas-fired generation. No new future natural gas facilities, combined with efforts to remove the lower Snake River dams—if successful—will create an oncoming energy crisis to meet demand.

Natural gas and the lower Snake River dams play an instrumental role in delivering power in the Northwest when wind and solar aren’t available. Last year’s ice storms in the Willamette Valley and the most recent heatwaves demonstrate the need for these resources to serve as a backstop to intermittent renewable generation to prevent blackouts.

With excessive heat early and drought conditions, Oregon faces a fire season potentially surpassing last year’s historic wildfires. The Legislature took bipartisan action to beef up the state’s response to wildfire mitigation efforts, including requiring investor-owned utilities to submit to the Public Utilities Commission a wildfire mitigation plan by the end of this year. Electric cooperatives must do so by June 2022. CEC updated and formalized its plan in 2020.

The legislation includes $185 million for thinning forests and additional firefighting capacity. It compliments Gov. Kate Brown’s June executive order, which preemptively declared a state of emergency due to the imminent threat of wildfires across the state. It authorizes the Department of Forestry and the Office of Emergency Management to use other state agencies’ personnel, equipment and facilities to respond to wildfire emergencies.

CEC is doing its part, too. We continue to upgrade our system and implement our vegetation management plan, including removing hazardous trees and brush that could ignite a wildfire from a downed power line. We stand prepared to execute a Public Safety Power Shutoff in high-risk fire areas should extreme weather conditions warrant it.

Perhaps collectively, we can take the “extra” out of extraordinary for the remainder of this year.

 

President's Report

CEC Unveils EV Rebate Program

CEO Dave MarkhamDo you own or are you considering the purchase of an electric vehicle? Are you looking to buy and install a Level 2 charger at your home? If so, I have good news for you.

If you own or buy an EV, register it with CEC today and receive $50.

Buy a Level 2 charger from any retailer and you can receive a $150 rebate or $450 to install a Level 2 charger approved by the Bonneville Power Administration.

As Central Oregon’s population grows, so does our members’ interest and demand in EVs. The co-op’s service territory has the sixth-highest numbers of electric and hybrid vehicles in Oregon. Deschutes County ranks seventh-highest in Oregon for registered EVs and HEVs.

This upward trend will likely continue as EV adoption is poised to become mainstream in the decade ahead. Registering your EV with the co-op helps provide essential data to help us manage energy demands efficiently and plan for long-term electric infrastructure expansion.

The EV incentive and rebate program aligns with CEC’s historical commitment to support members’ interests. Throughout the decades, members advocated for the co-op to develop green energy and provide energy-efficiency programs.

CEC listened and took action. As a result, we built a community solar array at our Bend office in 2015. Since 1995, we have owned a portion of the Coffin Butte Landfill Gas Generation Project north of Corvallis. In the 1970s, the cooperative created a conservation and energy-efficiency program ahead of its time. Today, our programs offer members a wide range of energy-efficiency options to conserve energy.

As EVs become more affordable—accompanied by improvements in battery life and driving range—we want to partner with members to integrate EVs into our electric system that benefits everyone.

Please note, the money going to members for these EV and charger rebates does not come at the membership’s expense. The money comes from the state of Oregon’s Clean Fuel Program, funded through the purchase of credits by regulated entities whose fuel sources do not meet the annual average carbon intensity requirements. The state wants utilities to spend the financial proceeds from selling those credits on promoting transportation electrification in their service territories.

To take advantage of our valuable rebates and incentives programs, visit us at www.cec.coop/customer-service/electric-vehicles. Here, you can quickly register your vehicle, review eligible charger models and complete the online rebate application

President's Report

Preparing for Wildfire Season

CEO Dave MarkhamAs Central Oregon enters fire season, I urge you to explore this month’s Ruralite dedicated to wildfire and Public Safety Power Shutoff preparedness. You will find information to help you prepare for a possible PSPS event, and how to protect and safely
evacuate your home should the need arise.

Last year’s Labor Day wildfires are a sober reminder of how high-wind events can quickly contribute to the spread of wildfires in wildland-urban interface areas. Combined with ongoing droughts; long, hot summers; and disruptive weather events; we must
remain vigilant in our awareness and preparation.

One only has to drive through the Cascades on Highway 126 along the McKenzie River or Highway 22 through Detroit to witness the almost instantaneous devastation incurred by the high winds and subsequent fires that ripped through those areas, tragically taking human life.

Foundations lay bare as adjacent tents and trailers serve as temporary housing. Along the winding highways, the noises of chainsaws, tree pickers and chippers fill the air.

Hope is in the air, too. Skeleton framing shapes new homes, and restrung power lines provide energy for the rebuilding. The occasional “McKenzie Strong” or “Detroit Strong” signs greet drivers, inspiring you to believe those who chose to remain will pull through.

Anyone living in Central Oregon long enough knows what happened on the west side of the Cascades can happen here. CEC’s service territory—which covers 5,300 square miles, including multiple national forests—has several high-risk areas susceptible to wildfires.

We can’t predict the next lightning strike or extreme weather event. But we are making every effort to minimize our system’s assets as a contributing factor in a wildfire’s ignition.

CEC’s wildfire mitigation plan takes an active and comprehensive approach toward that end. Goals and metrics measure their effectiveness while allowing for retooling and improving practices as they evolve, including adopting new technologies when available and feasible.

The plan also includes Public Safety Power Shutoffs as a potential tool. Turning off electricity is not a decision taken lightly. Many factors can influence a decision: the
National Weather Service’s red flag warnings, sustained high winds and low humidity, public safety concerns and live boots-on-the-ground reports.

CEC’s electric system follows the National Electrical Safety Code’s specifications to resist high winds. However, it is the threat of foreign objects contacting our power lines during a high-wind event that heightens concerns—such as trees outside of rights-of-way, tarps and canopies that can bring down poles and power lines and ignite fires. To prevent this from happening during a high-wind event, executing a PSPS can be an effective tool to protect members, homes and local communities.

Preparing for wildfire season must be a collective effort. We must be ready for the worst and hope for the best. To learn more about what CEC is doing and what you can
do, visit www.cec.coop/safety-education/wildfire-preparedness.

President's Report

CEC Sells its Telecom Subsidiary

Central Electric Cooperative (CEC) announces that it has sold its ownership interest in LS Networks (LSN). The transaction closed on March 31 with CEC receiving approximately $50 million as its share of the sale proceeds.

CEC helped create LS Networks 15 years ago with a mission to bring top-tier bandwidth and fiber-optic network connectivity services throughout the Pacific Northwest. LS Networks was owned by CEC’s subsidiary, CEC Resources, and three other cooperative shareholders. The carrier-grade network has grown to 7,800 fiber miles serving large and small commercial and individual customers in rural and urban communities, including schools, governments, healthcare organizations and businesses.

“I am incredibly pleased to see the investment CEC made over the last 15 years in LSN prove financially rewarding for the co-op,” said CEC’s President and CEO Dave Markham, former chair of the LSN Board of Directors. “Timing is everything, and now was the opportunity for the co-op to monetize its investment after all these years,” he added.

In 2000, CEC formed CEC Resources consisting of for-profit companies offering propane and telecommunication products and services. Born out of necessity due to energy deregulation, which threatened to up-end the electric utility business model and create financial uncertainty, the subsidiaries allowed CEC to diversify and generate additional income streams.

William B. Keeton, CEC’s board chairman, recalls those early days. Keeton and fellow CEC board member Tom Strand, both board members at that time, stated, “The CEC board made the challenging but right decision for the co-op to invest in LSN.”

Fifteen years later, having stayed the course through some tumultuous times, the board’s foresight and intuition proved correct.

Dave Markham and CEC’s Chief Financial Officer Rawleigh White, who joined the LSN board in 2008, helped guide LSN through its challenging years and, eventually, on the path towards long-term growth and economic viability. They advocated for LSN to reconfigure its business model to aggressively fund and build out a “last mile” network to generate greater market penetration and stability. Over time, the investment and expansion into commercial, government, education, medical and wireless carrier business propelled LSN’s revenue upward over the last three years.

CEC Board Director Bill Rainey, who chairs CEC Resources, lent his 35 years of business and legal acumen to help navigate the sale’s complexities and deliver this significant achievement.

“The CEC Board of Directors’ prudent decision to sell LSN has enhanced the co-op’s long-term financial well-being,” said Rainey. “It was a privilege to take part in this effort.”