President’s Reports

The first Monday of every September is Labor Day, a holiday celebrating the American worker. It is an opportunity to pay tribute to those who display their resilience, dedication and collaboration throughout the year.

These attributes reflect your rural electric cooperative employees–past and present–who have worked tirelessly to keep members’ lights on since the co-op’s inception.

In Central Oregon, nine farmers embodying that spirit banded together in 1938 to form a cooperative to bring electric service to rural areas when other utilities showed no interest. The farmers’ vision and efforts culminated in the formation of Central Electric Cooperative, Inc. in 1940. With their labors, and electric system began to take shape.

On May 17, 1941, with a light spring snowfall, the founders flipped the switch at Deschutes Junction Substation midway between Redmond and Bend. The lights came on, illuminating 11 farms in the area and providing the first electric service to CEC’s founding members.

The first full-time lineworker, hired in 1941, initiated the slow growth in crew and other personnel, totaling seven by the end of World War II. These employees managed an electric network of 250 miles and delivered power to 600 members.

Today, CEC has more than 30,000 members and nearly 4,000 miles of power lines in a 5,300-square-mile service territory overlapping five counties. Our members are residents, farmers, ranchers and businesses, including St. Charles Hospital in Bend.

CEC’s employees are crucial to the cooperative’s success.

Operations employees work in various types of high desert weather conditions, from summer’s extreme heat to winter’s subzero temperatures. They must respond to service interruptions, build large projects and maintain the electric system to provide safe and reliable power to our members and communities.

CEC’s workforce is so much more than just the outside employees. CEC customer service representatives courteously greet members at the front desk or by phone, ready to answer their questions and provide or direct them to the information regarding the co-op’s numerous products and programs, ranging from energy efficiency and rates to financial assistance.

CEC’s member services personnel support the organization’s external and internal communications with the members always in mind.

Behind the scenes, the engineering department meticulously designs and maps the ever-growing system to safely and reliably meet load growth. Logistics employees procure and maintain a vast inventory to meet this load growth.

Information and technology staff consistently maintain and upgrade infrastructure to enhance operations and reduce cyber-security risk. Administrators and finance personnel effectively manage costs within their control to keep rates low, while management guides the co-op through a rapidly transforming and evolving industry to meet CEC’s long-term goals.

Throughout the years, CEC has built an excellent reputation as one of the best service-oriented companies in Central Orgon, and that is because of its employees.

While we officially observe Labor Day one day a year, I am thankful throughout the year for the co-op employees who serve our members.

Brad Wilson, President and CEO

I am honored to be Central Electric Cooperative’s new president and CEO. I was raised in Central Oregon and have served CEC in various roles for 26 years.
There is no other place I want to be.

Before looking forward, I want to reflect and recognize my predecessor Dave Markham, who worked tirelessly the past two decades to solidify the utility’s long-term financial stability and transform CEC into an exemplary leader in the state and federal legislative and regulatory arenas. I could not ask to inherit a better position.

Fortunately, I have been there every step of the way to learn and understand how to manage the cooperative successfully. My roles evolved from journeyman lineman to director of operations and engineering and then chief operating officer.

The experience has taught me the not-for-profit business model, given me intimate knowledge of our service territory’s infrastructure and helped me value the employees who keep the lights on.

Along this road, major mile markers for me include managing the rollout of CEC’s advanced metering infrastructure, developing and implementing its wildfire mitigation efforts, and ongoing infrastructure improvements to provide you with safe, reliable and affordable electricity.

The electric utility industry faces many ongoing challenges, and we still feel the lingering effects of the COVID-19 pandemic: rising inflation, supply chain delays, a slowing economy and increased power costs.

An additional layer of complexity is the state’s decarbonization and renewable energy goals. Bringing online intermittent solar and wind resources raises numerous short- and long-term resource adequacy concerns. While the clean, renewable hydropower energy—100% carbon-free—supplied by the Bonneville Power Administration serves as CEC’s energy backbone, we must be visionary and creatively proactive in augmenting our primary energy resource to meet Central Oregon’s growth and demand for electricity.

CEC—built to deliver power to farms and ranches outside the city core areas along Highway 97—is one of the fastest-growing utilities in the state. Rapid growth has brought more suburban and commercial demand into our service territory. We must continue to build new infrastructure while replacing aging equipment in outlying areas.

While change is inevitable, the core of CEC’s success is its members and employees. The co-op wouldn’t exist without both. On behalf of our members, we must continue to value and uphold the Seven Cooperative Principles, including Democratic Member Control and Concern for the Community.

CEC puts a high premium on its workforce for its safety and retention. Staff members are diligent, flexible and ready to assist. Because of them, CEC is well prepared for challenges as they arise.

When thinking of CEC, the words commitment and ownership immediately come to my mind. They are shared collectively by the board of directors, management and employees.

Keeping those principles in mind, I am grateful for this opportunity and ready to lead.

Brad Wilson, President and CEO

Central Oregon’s high desert is no stranger to extreme temperatures. Arctic bomb cyclones and summer heat domes come and go, imposing below-zero to triple-digit temperatures, setting records in their wake.

These weather events can adversely affect your electric bills. Central Electric Cooperative wants to serve as your trusted energy adviser to help you maximize saving and experience year-round comfort while having a home that benefits from greater efficiency.

Members have benefitted from our numerous energy-efficiency, heat pump and electric vehicle programs, receiving $700,000 in rebates funded through the Bonneville Power Administration and CEC.

Last year, our energy-efficiency programs saved members 2.1 million kilowatt hours–enough to power 130 CEC homes.

Working with BPA, CEC has developed multiple energy-efficiency programs to help all members.

Here are a few highlights of our residential programs.

Heat pumps and duct sealing. Heat pumps may save, on average, 25% to 50% off the heating and cooling portion of your electric bills because they move heat instead of generating heat, requiring less energy. CEC offers a cash discount of $250 to $1,450 on the cost of a heat pump, depending on its efficiency and the existing system. You must use a CEC program authorized contractor to receive the discount.

Heat pump water heater. These water heaters can save you more than 60% on the water heating part of your electricity bill. The equipment pulls in air from the space around it, extracting heat from the air and transferring it to the water tank via a refrigerant coil. CEC offers a $1,000 rebate, and a federal tax credit of 30% is available for certain installations.

Weatherization program. CEC offers insulation and window rebates to members living in older, electrically heated homes. Rebates vary depending on the project, and project materials must meet program requirements.

Smart thermostats. CEC offers a $140 rebate for upgrading to a qualified smart thermostat in your electrically heated home. On average, these smart thermostats can save you 8% to 15% annually on your heating and cooling costs. Visit our website for a list of qualifying thermostats.

Income-qualified programs. CEC has partnered with NeighborImpact to offer special incentives and resources for income-qualified households. The program is for renters or homeowners. It covers site-built or manufactured homes, and can provide free home weatherization and a heat pump. Call us to find out more information.

CEC also has rebate programs for irrigation accounts, commercial and industrial members, and electric vehicle owners.

To learn more about these programs, visit www.cec.coop or call 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 an income-qualified program, they can connect you with NeighborImpact.

We can help improve your quality of living, no matter what the weather.

The 2023 state legislative session is underway, and there is considerable activity on energy-related issues. Two bills have emerged that would undermine your electric cooperative’s system reliability and local governance.

SB 635 would grant authority to counties to levy uncapped and unlimited fees for building or maintaining utility poles and power lines within the rights-of-ways along county roads. This legislation would impose fees, create lengthy maintenance deferrals due to permitting delays and ultimately put electric reliability at risk.

CEC’s infrastructure spans 5,300 square miles, with thousands of miles of transmission, distribution and underground lines in five counties.

Electrical infrastructure in these rights-of-ways requires inspection, regular maintenance, upgrades and replacement to continue providing safe and reliable power to members.

Compounding the upkeep are unpreventable catastrophic weather events—such as wildfires and ice storms—creating significant system impacts requiring immediate repair, construction or alteration of service lines.

Currently, the permitting process with the multiple counties in CEC’s service territory is prompt and efficient. Empowering counties to impose new fees will be disruptive, creating additional bureaucracy and costly and lengthy delays.

HB 2846 would strike at the heart of local control, setting a terrible precedent. Currently, cooperatives may cap the generating capacity of members’ net-metered systems, leaving it to individual co-op’s governing bodies to determine whether it wants to go beyond the cap.

For example, CEC voluntarily surpassed the statutory mandate of net-metered systems in 2019 and now has three times the maximum amount of net-metered generating capacity on its system, reflecting members’ strong interest in solar.

No cooperative is the same. For some, especially in rural and frontier Oregon, going above the maximum statutory requirement may not work for them. Preserving local board decision-making is paramount, as it allows cooperatives to tailor policies to ensure their success.

Finally, momentum in Salem is building for drafting a statewide energy plan to help Oregon chart a low-carbon future. Any energy plan should embrace our incredible hydropower resources, including the lower Snake River dams. These facilities remain the best tools to keep rates affordable, lower carbon emissions and prevent blackouts during extreme weather events, such as the ones Oregonians have experienced in the past several years.

We have much work to do and will provide timely updates on any developments during this long legislative session.

Dave Markham, President and CEO

The recent surge in physical attacks sabotaging electrical substations throughout the country serves as a somber reminder of the vulnerability of the electric grid’s critical assets. Substations play a crucial role in
moving power from generation sources to end users.

Late last year, numerous utilities reported criminal activity. In North Carolina, two substations about 10 miles apart were shot at, creating enough damage to put nearly 45,000 customers in the dark for days.

Closer to home, Portland General Electric reported an attack on a substation in Clackamas County. Cowlitz Public Utilities District in Washington had two substations vandalized.

On Christmas Day, nearly 14,000 customers lost power as Tacoma Public Utility and Puget Sound Energy had a combined four substations sabotaged. Two suspects were apprehended. They confessed their motivation was to cause a power outage so they could commit a burglary nearby.

These criminal acts did not require a high degree of sophistication. Reportedly, the perpetrators used hand tools, guns and arson to destabilize the substations.

The motivation for some of these attacks remains unclear. Are these lone-wolf events, or are they coordinated and carried out by extremist groups? Are some of the attacks copycat crimes? A swift, unified response is underway across government and the industry to find answers.

Securing and protecting Central Electric Cooperative’s electric grid is a priority. The co-op’s 5,300 square miles of service territory and its 24 substations make physical security more challenging.

The federal Bonneville Power Administration’s infrastructure, which delivers power to the co-op and other
utilities in Central Oregon, poses another layer of physical security challenges.

An attack on BPA or CEC infrastructure could cause thousands to go without electricity, disrupting households and businesses and putting communities and those lives dependent on electronic medical
devices at risk.

Since the outbreak of attacks, BPA has intensified its security state, leading its security officers and field staff to increase patrolling of its facilities.

CEC also continually monitors, evaluates and prepares for threats to the grid. We have long-standing layers of security in place across our system to help protect critical infrastructure from human threats. Those efforts are routinely assessed and improved upon where and when possible.

Fortunately, we are not alone in this endeavor. Collaboration is an essential tool. CEC and other electric co-ops work alongside industry partners, government agencies, law enforcement and local officials to share information on how to strengthen the physical security of the electric grid and build greater awareness about potential threats.

As the investigations of the recent incidents evolve and we learn more, we will adjust our preparedness plans and apply appropriate modifications.

You, too, can help. We are asking the general public to remain aware when in the vicinity of electrical infrastructure—such as substations—and report anyone or activities that look suspicious or unusual.

Not every attack is preventable, but CEC remains committed to employing all available resources to reduce risk and protect the grid.

Central Electric Cooperative, a not-for-profit utility, buys almost all its power from the federal Bonneville Power Administration to deliver more than 95% renewable, carbon-free electricity to its members.

Because your kilowatt-hour use may fluctuate dramatically—mostly due to weather conditions—the co-op must have a consistent source of revenue to cover its fixed operating costs.

Why is there a facilities charge?

CEC has fixed costs necessary to maintain and operate its electric system. These costs include operations, equipment, buildings, labor and administration—everything to ensure your lights come on when you flip the switch. To learn more, see pages 4 and 5.

Why must residential members pay the same facilities charge even if they use different amounts of electricity?

Whether a member’s monthly electricity use is low, average or high, CEC must recover its fixed costs of delivering safe and reliable electricity. The facilities charge ensures members pay their fair share
of the costs to operate the utility.

Why is there a kilowatt-hour charge?

A kilowatt-hour is the amount of power consumed during a fixed period. Members can see their kWh monthly use and compare it to the previous period or the same period as last year. To easily access your energy use and electric bill, sign up for the web and mobile app SmartHub. Go to CEC’s home page at www.cec.coop to register for SmartHub online access.

How does CEC’s residential kilowatt-hour charge compare to the state of Oregon and the national average?

CEC’s average residential rate is 7.1 cents per kilowatt-hour, far below the state of Oregon’s 11.2 cents average and the U.S. average of 13.2 cents per kWh.

How are rates determined?

CEC periodically conducts a cost-of-service analysis to determine the appropriate rate for every customer class, including the facilities charge.

Phase IV of Central Electric Cooperative’s gradual rate design begins in January 2023. Residential members will see a slight decrease in the kilowatt-hour energy charge, offset by a slight increase in the monthly facilities charge on their February statements. On average, the typical residential bill will remain unchanged.

The transitional rate redesign, which began in 2017 and ends in 2025, addresses an imbalance in the rate structure. Phase IV marks the fourth of five phases—every odd year over eight years.

Historically, the utility industry blended all expenses into a customer’s energy use charge, as did CEC. Out of convenience, the practice entailed lumping a utility’s fixed costs—operations, inventory, maintenance, repairs and administrative overhead—with the kilowatt-hour charge.

The practice led to a twofold problem. First, the methodology painted an inaccurate perception among members that the co-op’s services were defined solely by their electricity use, unaware of the fixed costs to run the utility. Secondly, while the co-op’s expense to buy energy for its members fluctuates based on weather and the energy markets, fixed costs remain constant and steadily increase. Over time, the co-op’s fixed costs outpaced revenues reliant on selling energy.

CEC began addressing the issue in 1978 when it added a customer charge—later named the facilities charge—to add some revenue stability. It started with gradual increases—initially, $6.25 a month, climbing to $12.77 before launching the rate redesign in January 2017. However, the charge did not keep pace. CEC’s fixed costs significantly exceeded revenues and put the co-op’s rate design out of balance.

Various factors contributed to this imbalance. The weather is the chief driver of electricity demand and has become more unpredictable and extreme, creating strong fluctuations in revenue and making business management more challenging. Also, the electric industry has rapidly evolved, with emerging technologies affording customers multiple ways to reduce their energy use through efficiency and rooftop solar.

CEC applauds and encourages members’ efforts to reduce their energy use. Nevertheless, the unintended consequences resulted in fewer members helping the
co-op recover its fixed costs, leaving other members to pick up the balance. The inequity required separating or decoupling fixed costs from electricity use.

To create a balanced solution, 10 volunteer co-op members representing all customer classes served on a rate design advisory committee in 2016. After studying various options, the board of directors adopted their recommendations.

The committee’s efforts achieved a revenue-neutral redesigned rate structure to bring fairness and balance among the different rate categories. Once we cross the finish line in 2025, members will pay for the energy they use and their fair share to operate the utility.

In this space, I have expressed skepticism about the political process and gamesmanship involving efforts to breach the four lower Snake River dams, an integral part of the Federal Columbia River Power System. However, I recently was encouraged by the commonsense and objectivity Gov. Jay Inslee (D-WA) and U.S. Sen. Patty Murray (D-WA) displayed.

In late 2021, the two commissioned a federal-state process to examine if there are reasonably available means to replace the lower Snake River dams’ benefits. Because the dams contribute a critical energy source for Oregon electric co-ops, we actively participated in their process. Outside experts commissioned several studies to assist Inslee and Murray in their decision-making.

After an extensive review of their process, Inslee and Murray concluded breaching the dams is “not a feasible option in the near term.” Furthermore, they were adamant that “… the replacement and mitigation of the benefits must be pursued before decommissioning and breaching.”

They also stated, “Key infrastructure, energy and other investments are needed to breach responsibly,” which does not allow for a rapid replacement of these resources.

U.S. Congress would need to authorize and expend an estimated $31 billion to conduct a herculean infrastructure program to replace the benefits of the lower Snake River dams. This staggering expenditure of scarce taxpayer dollars should go toward other pressing needs: repairing roads and bridges and ensuring access to broadband and clean water for American families.

The debate about the lower Snake River dams is far from over. Central Electric Cooperative and other Oregon electric cooperatives continue to constructively engage
in any process to reinforce that breaching the dams would impose a severe rate increase, undermine state climate goals and increase the likelihood of blackouts during extreme weather.

As co-op members, we must ensure policymakers hear our voices on energy policies affecting the ability to deliver affordable, clean, reliable power to the communities we call home.

Join ORECA-Action’s Voices for Cooperative Power and become part of a growing team of electric cooperative member-advocates in Oregon and across the country working together to make sure we are heard. Visit voicesforcooperativepower.com/Oregon to sign up.