President’s Reports

Not 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.

A 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.

Do 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

As 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.

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.”

Upon hearing Gov. Kate Brown’s intent to sue the federal government over how it manages the federal Columbia River system, I was disappointed but not surprised at her decision. I encourage her to reconsider.

In October, the governor committed to participating with Washington, Idaho and Montana—known as the four-state process—to define a collaborative framework to find common ground to restore a healthy salmon population without adversely impacting affordable electricity and local economies.

Yet right before Thanksgiving, Brown directed the state of Oregon to file a 60-day notice of intent to sue the federal government over the National Oceanic and Atmospheric Administration’s 2020 environmental impact statement. The scientific study examined the potential impacts on fish and wildlife from proposed hydroelectric operations and found the recommended operations were consistent with the Endangered Species Act.

At issue is the governor’s unwillingness to accept the EIS’s recommendations. The three-year study, produced by multiple federal agencies, did not include breaching or removing the lower Snake River dams in Eastern Washington, a critical component of the Bonneville Power Administration’s hydroelectric Columbia River system. The dams produce 1,000 average megawatts of reliable, carbon-free energy annually—enough to power more than 800,000 Northwest homes, including 500,000 in Oregon.

Instead, through her actions, the governor dismissed the EIS before its completion as she publicly released a letter early last year calling for the removal or breaching of the four lower Snake River dams.

Brown claimed removing the dams would “simultaneously address both the orca and salmon recovery dilemma” in the region. However, she chooses to ignore that successful fish-passage technology at the lower Snake River dams achieved a juvenile dam passage survival objective of 96% to Chinook salmon and steelhead, according to a 2017 NOAA Fisheries study.

I have shared in this space before that removing the dams would create the need to replace lost energy at an estimated cost of $860 million to ratepayers. Ironically, the loss of available energy would need to be offset by energy sources with higher carbon content, undermining the governor’s long-term carbon reduction goals.

All parties involved come to the discussions with different perspectives but are committed to finding a consensus on a viable solution. What is so disappointing in the latest turn of events is how the governor’s litigation threatens to undermine the four-state process before it has earnestly begun and stalls momentum for any collaborative dialogue. As a result, the legitimacy of the process may be dead on arrival.

Rather than resort to litigation, I respectfully urge the governor to reconsider and come back to the table for the good of Oregon and the region.

COVID-19 unleashed a tidal wave of epic proportions this year, inflicting human suffering and economic hardships, and disrupting social norms. As Oregonians dealt with the ebb and flow of the corona-virus, extreme high winds instigated catastrophic wildfires that took human life and burned homes and 1.5 million acres. The accumulative aftermath will be felt for years, leaving 2020 a year many would like to forget but will always remember.

In unchartered waters, Central Electric took decisive action. Our offices closed in mid-March to walk-in business for our members’ and employees’ safety and health. More than 60% of our employees began working remotely. We postponed the annual membership meeting—the first time in our 79-year history—but con-ducted it via teleconference in early June.

In March, Gov. Kate Brown’s “Stay home, save lives” executive order created a financial hardship for many of our members due to business closures, lost jobs and the resulting economic downturn. CEC was one of the first utilities in the state to suspend service disconnections.

We immediately ramped up our efforts to help members receive financial assistance to pay their electric bills. Thanks to federal aid through the CARES Act and Energy Assistance Stability Coronavirus Relief program combined with a regional organization, NeighborImpact, and CEC’s Project Helping Hand, we helped members receive $215,000 in financial assistance by October’s end. I am proud to report our membership also stepped up to help financially, with a 7% increase in the number of members donating to PHH.

Central Oregon escaped the wildfires mostly unscathed. However, the events further reaffirmed CEC’s ongoing commitment to reduce wildfire threats in its service territory. Those efforts included removing encroaching vegetation and replacing older poles along a 13-mile overhead power line route in heavily forested Camp Sherman.

CEC formalized its comprehensive wildfire mitigation plan, which extensively details programs to adapt our system to evolving fire-related conditions, implementing new technology to detect issues before they arise and enhancing operational practices to mitigation the potential for ignitions.

CEC lent its expertise as a participant in Oregon Public Utilities Commission work-shops to develop and share best practices to reduce wildfire risk. Six years of federal advocacy came to fruition when the U.S. Forest Service issued a new rule to streamline and expedite the permitting process to allow utilities to conduct maintenance and remove vegetation along its rights-of-way on federal land.

While CEC’s office personnel continued to provide quality service while working remotely, the line crews’ fieldwork did not slow down. The region’s significant growth carried over to CEC, and we connected the highest number of new services since 2007.

Implementation of CEC’s Strategic Investment Initiative continued, replacing aged underground cable and power poles, completing upgrades to substations and the transmission system to meet current and future energy needs, and ensuring long-term reliability and safety.

We all have been tested and challenged this year to various degrees. Throughout, CEC and its employees appreciate the privilege of serving you. We wish you happy holidays and best wishes in the new year.