President’s Reports

President's Report

A Year Unlike Any Other

CEO Dave MarkhamCOVID-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.

President's Report

Balancing Differences Among Rate Categories

CEO Dave MarkhamIn January 2021, Phase III of Central Electric Cooperative’s gradual rate redesign goes into effect. 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 bills. On average, the typical residential bill should remain largely the same.

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

Historically, the utility industry blended all of its costs into a customer’s energy use charge. The cooperative did too. Born out of convenience, the practice entailed lumping a utility’s fixed costs—such as operations, inventory, maintenance, repair and administration overhead—with the kilowatt-hour charge. This approach created an inaccurate perception among members that the co-op’s services were defined solely by how much electricity they used. While a utility’s expense to buy
energy for its members fluctuates based on weather and the energy markets, its fixed costs
remain constant.

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

Various factors contributed to this imbalance. The chief driver of electricity demand is weather. It has become more unpredictable and extreme, creating strong fluctuations in revenue and making business management more challenging. 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 contributing toward helping the co-op recover its fixed costs, leaving other members to pick up the balance.

Consequently, it became necessary to separate or decouple fixed costs from electricity use because fixed costs began to exceed revenues. Ten volunteer co-op members representing all customer classes served on a rate design advisory committee in 2016 to create a balanced solution. 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. In the end, members will pay for the energy they use and their fair share to operate the utility.

President's Report

California Blackouts Serve as a Cautionary Tale

CEO Dave MarkhamWith temperatures topping 100 degrees and millions working from home due to COVID-19, hundreds of thousands of California homes went dark in August.

The blackouts were not a result of utilities de-energizing lines to prevent wildfires. Instead, there was a shortage of power when most needed. The aftermath left Gov. Gavin Newsom, utility representatives and the state’s bulk electric system operator pointing fingers at each other.

Numerous factors contributed to the blackouts: lack of available power supply internally and from out of state, transmission issues, volatile changes in wind generation and over-reliance on intermittent renewables.

The culmination of the crisis did not happen overnight. California paved the road for such an event long ago. Since the early 2000s, the state legislature passed multiple ambitious clean-energy policies. The renewable portfolio standard and cap and trade were landmark bills held up as the gold standard. They were imitated by other states, including Oregon, to varying degrees.

California’s RPS required electric sales to be 20% renewable by 2017. In subsequent years, the program was accelerated to 33% by 2020, 60% by 2030 and 100% by 2045.

The aggressive targets and expedited timeline forced California to transition away from coal, natural gas and nuclear power in favor of solar and wind. In the interest of developing alternative renewables, large hydropower—a 100% carbon-free, 24/7, flexible and reliable resource—does not count toward the RPS. California’s shuttering of natural gas and nuclear plants left fewer flexible and reliable resources to meet high peak demand.

Wind and solar should play an instrumental role in an all-of-the-above energy resources strategy. Without affordable large-scale battery storage, however, they cannot serve as the backbone to a state’s energy supply. When the wind stops and the sun goes down, these intermittent resources disappear—sometimes when most needed. To replace the lost energy requires expensive spot-market purchases, putting ratepayers on the hook.

Oregon has headed down a similar path. Although it failed in the last decade to pass a California-style cap-and-trade program, the state adopted an RPS in 2014, requiring 50% renewables by 2040. Likewise, Oregon recognizes wind, solar, wave energy and landfill gas as eligible resources, but not large hydropower.

The state legislature should not accelerate beyond a 50% renewable goal anytime soon, but it is considering doing so next year. Nor should there be any continued efforts to undermine the Pacific Northwest’s most significant energy asset: hydroelectricity.

Hydropower is generated along the Columbia, Snake and other major rivers and delivered to eight different states by the federal Bonneville Power Administration. The energy backstops intermittent renewables while providing public safety and regional economic value.

In the meantime, special-interest groups continue to push for breaching the Lower Snake River dams, which would adversely impact the Northwest’s electric grid’s reliability by taking more than 1,000 average megawatts offline and requiring market purchases at a higher cost and carbon content.

Oregon should take heed or find itself in the dark, too.

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 and check out our offerings. Our energy specialists can also help you select the right program for your needs.

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,, 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 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,, 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 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.