President’s Reports

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.

The lower Snake River dams—a critical component of the Federal Columbia River Power System—produce firm, reliable, carbon-free, affordable energy and play an essential role in keeping the lights on for millions of consumers, especially during extreme winter and summer events. Yet, the light produced by this valuable resource is at risk and faces going dark—permanently.

Dam politics are playing a big role in getting the dams removed.

The Bonneville Power Administration, which manages the FCRPS, released its 2020 Columbia River Systems Operation’s final Environmental Impact Study, which stated breaching the dams would:

• Create an additional 3.3 million metric tons of carbon dioxide, a staggering 10%
  increase in power-related carbon emissions across the Northwest.
• More than double the region’s risk of power shortages.
• Substantially increase wholesale electricity rates by approximately 25%.

Fast forward to this summer. Washington Gov. Jay Inslee and Washington Sen. Patty Murray, dissatisfied with some of the federal agencies’ best fisheries specialists’ conclusions, released their commissioned study to get the desirable answer. There is a path forward without the dams, with yet-to-be-determined resources at a potential cost up to $27.2 billion paid for by ratepayers or taxpayers.

However, the governor and senator’s report fails to consider the significant adverse ramifications should this happen: loss of clean, reliable and affordable power. Negative impacts on the climate. Heightened risk of blackouts. Adverse effects on regional economies. Imposition of unnecessary financial costs on vulnerable populations.

The report also ignores how the lower Snake River dams’ fish-passage technology—financed by the region’s ratepayers at almost $2 billion—achieved a juvenile dam passage survival objective of 96% for Chinook salmon and steelhead, per the federal National Oceanic and Atmospheric Administration’s 2017 study. The dams and fish can co-exist.

The White House Council on Environmental Quality, which rarely weighs in on BPA or Department of Energy issues, injected itself into the fray, releasing its review draft study endorsing the removal of the lower Snake River dams.

The CEQ interfered further and successfully delayed BPA from releasing its power replacement study should the dams be breached. BPA’s Energy, Environmental & Economics (E3) study finally came out on the same day CEQ released its review draft, but received scant coverage, unlike CEQ, which dominated the headlines.

The E3 study affirmed the value the dams bring to the Pacific Northwest. Replacing the lost power would come at a cost in the billions of dollars. That equates to anywhere from $100 to $230 per household annually. Senior citizens and those on fixed incomes should not have to choose between medicine and food or paying their electric bills.

Say no to breaching the dams and yes to keeping the lights on. Get involved! Sign up for Voices of Cooperative Power at https://voicesforcooperativepower.com/oregon, a platform to speak up about energy policies affecting your way of life.

Central Electric Cooperative’s price for residential electricity is among the lowest in the state and country.

CEC’s average residential rate is 7.5 cents per kilowatt-hour, far below the U.S. average of 13.2 cents per kWh.