Manager’s Message

Telling our Hydro and Rivers Story

You may have noticed recent TV advertisements that celebrate CleanHydro, an informational campaign that is raising awareness of the tremendous value of the Columbia and Snake river system. I am proud that Wasco Electric Cooperative is a part of this effort—now in its second year—because the Northwest’s hydropower dams and rivers benefit all of us and our members in many ways.

We joined this campaign because hydropower isn’t capturing the same kind of attention in the eyes of the public as it once did. There are several reasons for this; chief among them is that many people have moved to the Northwest from other parts of the country where hydropower wasn’t a daily part of their lives. Many of our young people haven’t grown up with the dams as we have and so may not understand their value. And, dramatic changes in the energy industry and government-led efforts to encourage other types of renewable energy—such as wind—have dominated news media headlines.

That is why we need to continue to tell the incredible story of our dams, hydropower and the Columbia and Snake rivers through CleanHydro. Last year, the campaign increased support for hydro across the board by demonstrating its value to the Northwest’s environment and economy. But our work is not done, which is why it is so important to Wasco Electric to be a part of this public education effort again this year. It will take a sustained effort to regain lost ground and keep the value of hydro firmly planted in the public’s mind and in conversations and debates about our energy future.

I hope you also will take a moment to visit,  www.cleanhydro.com so you can view the TV and print advertisements. While the advertisements promote the key ways hydropower and the rivers affect our lives, the website tells more about these amazing resources in greater detail. Please share it with your friends and families so they, too, can feel the same sense of pride about what we have right here in our own Northwest backyard.

Join us and help spread the word about this tremendous asset to our Northwest way of life.

Jeff Davis, General Manager

Capital Credit Change

At the January board meeting, the Wasco Electric Board of Directors decided to change—consistent with the current bylaws—how the cooperative retires the accrued capital credits of deceased members.

The current practice of retiring, upon request by a legal heir, 100 percent of a deceased members capital credit balance in an accelerated, one-time payment—rather than waiting for the normal retirement cycle—will be replaced with a discounted one-time payment.

Beginning in March, when the legal heir of a deceased member requests the payment of all annually accrued capital credits, those capital credits will be discounted using the net present value of money calculation in exchange for the early retirement. The discount rate used in the NPV calculation will be the cooperative’s actual five-year average weighted cost of capital, currently 7.25 percent.

If the heir chooses to receive the full value of the accrued margins, he or she is required to wait until the normal annual capital credit retirement cycle clears the balance of the deceased member’s account, currently about 28 years.

This change adopted by the board of directors comes from the recommendation of the cooperative’s Capital Credits Committee members, who spent the past year examining the financial impact of accelerated retirements—the co-op paid out more than $112,000 in 2013—as well as the business model of other cooperatives’ estate retirement processes. The committee found most electric cooperatives across the country use some means of discounting estate payments in exchange for the early, one-time payout of accrued margins.

If you have any questions regarding this change in policy, please feel free to contact me at our office at 541-296-2740.

Jeff Davis, General Manager

Rate Increase Effective

In July, Bonneville Power Administration announced a regionwide rate increase to both its power and transmission services. This increase resulted in an increase to Wasco Electric of 9.2 percent for power and 9.3 percent for transmission services.

The increase in wholesale rates stems from higher costs to operate and maintain the aging hydro system, higher long-term fish and wildlife costs, upgrades to an aging transmission system and reduced revenues from surplus power sales due to lower market prices for energy.

Following much deliberation and review with staff of the financial forecast and revenue requirements of the co-op during the past few months, the board of directors, at the regular September board meeting, approved an 8 percent overall rate increase to all rate schedules of the cooperative, effective with the November 2013 billing.

The rate increase is intended to cover the increased costs from BPA to its wholesale power and transmission rates, cover the cost of debt service to the loans for the system rebuilding during the past several years, maintain reasonable cash reserves, retire accrued margins, and pay for increased costs of goods and services to the co-op.

We understand the hardships and frustrations many of our members face, but we must make responsible financial decisions for the overall well-being of the cooperative and continued reliability of the electric system for today and into the future.

Increasing costs make energy efficiency more important than ever. We will continue to encourage our members to take advantage of our energy-saving incentive programs. The smarter we are about our energy use now, the less power we will need in the future.

Rate Increase Effective November 2013

In late July Bonneville Power Administration (BPA) announced a region-wide rate increase to both its power and transmission services. This increase resulted in an increase to Wasco Electric of 9.2% for power and 9.3% for transmission services.

The increase in wholesale rates stem from higher costs to operate and maintain the aging hydro system, higher long-term fish and wildlife costs, upgrades to an aging transmission system and the reduced revenues from surplus power sales due to lower market prices for energy.

Following much deliberation and review with staff of the financial forecast and revenue requirements of the co-op over the past couple of months, the Board of Directors, at the regular September board meeting, approved an 8% overall rate increase to all rate schedules of the cooperative effective with the November 2013 billing.

The purpose of the rate increase is to: cover the increased costs from BPA to the wholesale power and transmission rates, cover the cost of debt service to the loans for the system rebuilding that has taken place over the past several years, maintain reasonable cash reserves, retire accrued margins, and pay for increased costs of goods and services to the co-op.

We understand the hardships and frustrations that many of our members face, but we must make responsible financial decisions for the overall well-being of the cooperative and continued reliability of the electric system for today and into the future.

Increasing costs make energy efficiency more important than ever and we will continue to encourage our members to take advantage of our energy saving incentive programs. The smarter we are about our energy use now, the less power we’ll need in the future.

November 1, 2013 Rates

Power Rate Increase

Last month, Bonneville Power Administration announced a regionwide average 9 percent increase in wholesale power rates and an 11 percent increase in transmission rates effective October 1, 2013

The increase in wholesale rates stems from higher costs to operate and maintain the aging hydro system, higher long-term fish and wildlife costs, upgrades to an aging transmission system and the reduced revenues from surplus power sales due to lower market prices for energy.

The Wasco Electric management and board are determining the additional revenue requirements needed to cover the increased cost of power, as well as the cost to continue maintaining its own infrastructure serving the membership.

Later this month, we will announce what the final rate impact will be to the membership and when the increase will take place, likely as early as October 1.
We recognize that a rate increase will be a challenge for many of our members. I assure you we are working diligently to keep the increase as low as possible, yet maintain the system reliability and financial health of your cooperative.

Increasing costs make energy efficiency more important than ever and we will continue to encourage our members to take advantage of our energy-saving incentive programs. The smarter we are about our energy use now, the less power we will need in the future.

2013 Annual Meeting

Although November is far off, preparations for Wasco Electric Cooperative’s 74th annual meeting are underway. The meeting is Saturday, November 16, at Civic Auditorium.

During the meeting, members will vote on three director positions that are expiring—one from each of the three districts.

At its August meeting, the board of directors will appoint the member committee that will nominate candidates to run for those positions. This committee will meet in early September.

If you are a member willing to serve on the board of directors, please let us know. We will give your name to the nominating committee members for consideration. See page 8 of this issue for more information.

Current directors up for election this year are Bob Durham, District 1, serving on the board since 1994; Gary Brown, District 2, serving on the board since
1998; and Jim McNamee, District 3, serving on the board since 2006 and as the current secretary.

August Events

August is a busy time for many end-of-summer events. Below is a list of several signature events happening this month. I hope you are able to take in some, if not all, of these great events.

August 2nd to 4th: 26th annual Shaniko Days
August 9th to 11th: Cruise the Gorge, The Dalles
August 10th to 11th: Dufur Threshing Bee
August 15th to 18th: Wasco County Fair and Rodeo, Tygh Valley
August 21st to 25th: Sherman County Fair and Rodeo, Moro

As always, if you have any questions about your cooperative, please feel free to call or stop by the office.

Legislative Update

As the 2013 Oregon Legislation comes to a close, I want to recap an important role cooperatives played in preventing several potentially costly net-metering bills from becoming law.

In my April manager’s message, I discussed our concern with the various net-metering bills being considered in the committees of both the Oregon House and Senate. Each of these bills had the potential to cost all of the cooperative members a significant amount of money to solely benefit a single generator or developer.

As these bills were considered in the committees, cooperative leaders from across the state came to Salem to testify on behalf of their members. The message was clear: These bills will shift unwarranted costs to the entire membership for the benefit of a single project or developer.

I am pleased to report our efforts paid off. With the combination of the work done by the cooperative leaders and the support we had from the rural legislators, none of these bills made it out of committee during this session.

As cooperatives, we will continue to stress the value of local control and decision making as well as advocate for your rights to be protected from costly future legislation.

Legislative Update

As the 2013 Oregon Legislation comes to a close, I want to recap an important role cooperatives played in preventing several potentially costly net-metering bills from becoming law.

In my April manager’s message, I discussed our concern with the various net-metering bills being considered in the committees of both the Oregon House and Senate. Each of these bills had the potential to cost all of the cooperative members a significant amount of money to solely benefit a single generator or developer.

As these bills were considered in the committees, cooperative leaders from across the state came to Salem to testify on behalf of their members. The message was clear: These bills will shift unwarranted costs to the entire membership for the benefit of a single project or developer.

I am pleased to report our efforts paid off. With the combination of the work done by the cooperative leaders and the support we had from the rural legislators, none of these bills made it out of committee during this session.

As cooperatives, we will continue to stress the value of local control and decision making as well as advocate for your rights to be protected from costly future legislation.

Jeff Davis
General Manager

Power Rate Increase

Last November, Bonneville Power Administration released its preliminary record of decision on the wholesale power and transmission rates for the fiscal years 2014 and 2015, beginning October 1, 2013.

In this release, BPA announced an average increase of 9.6 percent for power services and a 13 percent increase for transmission. These numbers are averages for the region’s utilities, and each utility’s rate impact will differ based on its load. In Wasco Electric’s case, the increases are projected at 7.1 percent for power and 7.5 percent for transmission.

While the final decision on the region’s rates will not be released until late July, it is anticipated they will not differ much from the preliminary announcement. Therefore, we continue to evaluate our future rate design based on these preliminary figures.

Wasco Electric management is conducting a revenue requirements and cost of service study to determine what our rates will need to be to cover the additional cost of power. Your board of directors and staff are committed to doing all we can to lessen the impact of rates to members and still provide reliable service today and into the future.

Wasco Electric is committed to helping its members control costs through energy efficiency and conservation, which are are among the lowest-cost resources for your cooperative. Simple actions, such as lowering your thermostat in the winter and raising it in the summer, can result in big savings on your power bill.

We continue to offer free home-weatherization audits and rebates for insulation and window upgrades. We offer rebates for replacing some of your older appliances, and for upgrading to an energy-efficient heat pump system. We also offer energy-saving rebates for lighting upgrades in commercial businesses and several saving opportunities for our irrigated-agriculture sector.

Learn more about your energy-saving opportunities by calling our member services representative at (541) 296-2740 or visiting the Together We Save page with the quick link on the home page.

Legislative Visit

Along with leaders from the other 17 co-ops in Oregon, several Wasco Electric board members and I converged on Salem last month to spend a day meeting with our legislators.

The focus of our visit was to express our concerns with several bills related to changes to the state’s net-metering law.

The current net-metering law allows our members to install small-scale renewable generation—such as solar—
at their residence, and the energy their system produces in excess of their needs is generated back into Wasco’s system.

At the end of each year, the co-op pays the member/generator for the energy delivered to the co-op at the same rate per kilowatt-hour that we pay for wholesale power from the Bonneville Power Administration.

Wasco Electric has offered this program for many years. More than a dozen such projects are connected to the co-op’s system.

The proposed bills to change current laws—driven primarily by urban legislators and solar manufacturers—call for changes that could have a significant financial impact on all members of the co-op.

The two big concerns we have with these bills are increasing the generation capacity of nonresidential projects from the current 25 kilowatt-hour to 2,000 kWh and requiring the co-op to pay the generator our retail rate for the excess generation rather than the wholesale rate.

To give you a sense of the size and the potential financial impact such a change would have on Wasco Electric, let me break down the numbers.

A 2,000 kWh hydro-generation resource connected to our system under the proposed law would have the potential to generate more power than required at our Tygh Valley Substation, which serves the city of Maupin and the Bakeoven and Juniper Flat areas.

This excess generation would amount to millions of kilowatt-hours. At the retail rate, the co-op would be required to pay the generator more than $1 million. These costs to benefit a single generator would be shared by all of the members of the co-op.

The current net-metering laws work well as they were intended—to allow an individual customer to offset all or most of their energy requirements. Wasco Electric supports and encourages this approach. We do not support an approach that will allow one developer to profit from the cooperative at the expense of the other members.

Jeff Davis
General Manager

Questions? Call 800.341.8580