Wishing you a safe and joyous holiday season from all of us to you.
Matt Michel, General Manager
Every month, I like to take a minute and report on some of the issues that Lane Electric deals with. Sometimes, I may write about poles, lines and wires. Other times, it might be about power supply issues, service interruptions or member meeting schedules. And sometimes, it’s simply to keep you informed about what goes on at Lane Electric, your cooperative.
Be sure to check out the Ruralite archives on our site for other information you might be interested in, too.
Dear Co-op Community Members:
Your electric Co-op’s financial health looks good enough to get us through the winter season without a rate increase. The Co-op’s Board recognizes the value to members of not having a rate increase happen right before we all start using more electricity to heat our homes.
That’s why both the Board and staff are relieved to see that Lane Electric’s financial health is strong enough to carry us through winter.
In April, we expect to have a rate increase to address reliability improvements, inflationary pressures, and the Bonneville Power Administration’s wholesale power costs.
Stretching dollars to help members manage their winter budgets is just one example of the benefits of being part of Lane Electric Co-op. A co-op exists to return value to the grassroots community that created it—monetary value and community value.
Your Co-op is not-for-profit, so if higher electricity use from a cold winter brings in more revenue than budgeted, then yourdemocratically elected
Board may use that money to delay a rate increase and you still receive back a proportional share of the net excess margin as a capital credit.
Your Co-op supports and nurtures the rural community fabric that our members cherish.
Lane Electric donates to our local Granges, food banks, and high school graduation nights. We work side-by-side on economic development issues with the communities of Oakridge, Westfir, Lowell, Veneta, Creswell, Lorane, Crow, Dorena, McKenzie Bridge, Rainbow, and Vida to help them have a sustainable future.
Bottom line: Lane Electric Co-op delivers more than electricity. We energize the communities we serve.
Matt Michel, General Manager
Dear Co-op Community Members:
We owe you an apology. Specifically, we apologize to those members–about 15% of you—for the confusion on your August bill that said you were past due. It was a bill printing error, not an accounting error. That is to say, the “past due” will not negatively affect your payment history with Lane Electric or your credit report.
We further apologize to all of our members for not meeting your—and our—expectations for exceptional member service. I’ll briefly describe what happened in order to assure you that we have dug down to the root cause of the error.
This year Lane Electric’s Board of Directors elected to retire two years of capital credits and return that money to you, the co-op’s membership. We worked with our enterprise software co-op, NISC, to have the credit appear on your August bill in a more noticeable location. However, in doing so the bill print software didn’t calculate the bill correctly. If you called us confused about being “past due” on your July bill payment, our Member Service Representatives heard the concern in your voice and walked you through paying your August bill.
So what happened? This year we changed how capital credits were presented on your bill. In years past, it showed up in the upper right “YourElectric Bill Information” section as a credit to your balance. This year, it showed up in the middle left “Your Energy Bill Description” section. We moved it to the bill description section because that’s where we make adjustments to your bill. And since Murphy’s Law is alive and well, in attempting to highlight your capital credits being applied to your bill, our bill printing software got confused. The software pulled the “Current Month’s Charges” amount from the July bill, compared it to the amount you actually paid (after we applied your capital credits to your account), and incorrectly called the difference a “past due” amount on your August bill.
The capital credit appeared on your August bill like we expected, but the credit had already been applied to your account towards the July bill.
Your Lane Electric team has worked through their root cause analysis and put in motion changes that will address the printing error. Next year, should the Board choose to return capital credits, we’ll be ready to make it happen smoothly.
A co-op is a community business and we are disappointed that we caused confusion in the community we serve. We want to earn the privilege of being your member-owned co-op and your Trusted Energy Advisor. That means accepting responsibility when things go wrong, and taking steps to see that it doesn’t happen again. Thank you for your patience and understanding.
Dear Lane Electric Community:
Following up on my commitment to keep you informed on the rate pressures we see coming, we expect the Bonneville Power Administration (BPA) to increase its wholesale power rates by an average 5.5% over the next two years. We expect BPA’s transmission costs to remain about the same. Recall that Lane Electric’s power and transmission costs are roughly 40% of our operating costs—by far our largest cost center. Once we receive BPA’s final decision, we’ll plug those new rates into our estimated electricity sales for the rest of 2017 as well as 2018 to see what impact BPA’s rate increases will have on our financial health.
Why are BPA’s rates going up? Well, there’s the Good and Not-So-Good.
The Good: BPA did a good job cutting over $252 million out of their wholesale power costs and over $126 million in transmission costs over the next two years. I applaud BPA for their efforts. Relative to the uncontrollable cost pressures I describe below, you’ll see that the size of these reductions are very significant. Lane Electric advocated for these cost reductions in collaboration with PNGC Power, our generation & transmission co-op, and the Public Power Council, a regional trade association of BPA customers from across the Northwest. Our basic message was that BPA’s rate increases outpace inflation and are unsustainable. BPA heard that message and did what they could to bend that rate trajectory down, some.
The Not-So-Good: There are three significant costs drivers that BPA has no control over. First, BPA is selling less power to its public power customers, so BPA has less money to operate with. More efficient homes—specifically, more energy efficient appliances, heating/cooling, water-heating—along with evolving business processes needing less power, have permanently altered the Pacific Northwest’s power appetite. Second, BPA is making less money selling excess power in the western power market because cheap solar and natural gas power are keeping wholesale prices lower. Over the next two years, BPA expects its surplus sales revenue to drop by $100 million. That’s money that BPA would have used to offset its wholesale cost of power to Lane Electric. The third uncontrollable cost increase is escalating 2012 Residential Exchange Program Settlement payments to investor-owned utilities, like Pacific Power, totaling over $34 million more over the next two years. The REP Settlement is a long story so here’s the BPA website for all the details: www.bpa.gov/finance/ResidentialExchangeProgram.
There are also cost drivers that BPA does have control over. BPA insisted on collecting an additional $40 million over the next two years to start phasing-in a cash reserve over the next several years. BPA is concerned that the credit rating agencies may downgrade them sometime in the future because BPA may not be able to pay its bills. This is despite BPA having guaranteed contracts with public power customers—like Lane Electric—for power sales until 2028, a line of credit with the federal government, and the ability to raise wholesale rates to cover costs. To top it all off, even if BPA’s credit rating were downgraded, the additional cost they would likely pay to borrow money would still be less than what they want to collect! BPA should have a financial reserves policy, but not the Cadillac version.
Finally, Governor Kate Brown’s decision to short-circuit scientific consensus by suing the federal agencies implementing the Columbia River Biological Opinion (BiOp) may add up to another $40 million over the next two years. I talked about this on back pages of the March and June Ruralite.
In summary, we will again see rate pressure from BPA due to several complex factors. Staff will analyze the financial impacts for the Co-op’s Board of Directors and seek policy guidance on any retail rate action they believe necessary to keep your co-op on the right track for reliable power and affordable rates.
Dear Lane Electric Community:
Summertime is Lane Electric’s busiest construction time of the year. Dry weather and more daylight hours give our crews a good opportunity to take on larger, more complex capital projects. Likewise, you may have a few projects around your home, business, or farm that are on your summer to-do list. Whether inside projects or outside projects, please remember to be safe. Plan your work and then work your plan.
For indoor projects that involve wiring and electrical fixtures, make sure you turn the power off at the breaker panel to avoid getting shocked.
If you’re digging holes for new fence posts or planting trees or shrubs, ask yourself where possible underground wires might be. It is very important that you do not nick or cut them with a shovel or pick. If you are unsure about the location of underground wires, please take a minute and call 811, the Oregon Underground Notification Center. The process is quick and easy—and free!
When you call 811, you are connected to the One Call Center closest to your area. The call center takes your information and notifies Lane Electric of your request. A qualified professional is dispatched from the Co-op to locate and mark the area of any underground power lines before you dig and find them. To ensure that your job stays on schedule, please call a few days before you’re ready to allow for processing.
Also, be aware of any overhead power lines in your work area. Look up before moving irrigation pipes, using a ladder, installing a new antenna or flag pole, or moving large trucks, trailers or heavy equipment. As you make your plan, remember that “an ounce of prevention is worth a pound of cure.” It just might save your life.
Please take the proper precautions as you begin your summer projects. You’ll be glad you did. And give a wave to our crews out there this summer making improvements to your electric system!
Dear Lane Electric Community:
When was the last time you invited your neighbors to dinner? If it’s been a while, here’s an idea: Next Spring you can invite your neighbors to join you at Lane Electric’s district dinner meeting in your area. It’s an easy way to visit! We’ll set the table. We’ll provide the good food. We’ll even provide some starter conversation about your co-op and all things energy-related. All you need to do is extend a neighborly invitation.
Lane Electric Co-op held five district meetings this year starting in Dorena, then in Lowell, Crow, and McKenzie Bridge, with the last in Oakridge. We approach these events as a neighborhood gathering—hence my invitation for you to do the same. A local caterer serves up delicious food. We have drawings for beautiful plants and handy gifts, as well as some electric bill credits! And of course, we offer brief reports on the Co-op’s finances and operations. For me, I enjoy visiting with both people I’ve come to know and people I meet for the first time. The stories and life experiences I gather are the gift of sharing time. So, invite your neighbors to next year’s district meeting and share some time—and dinner—with them and your co-op!
At this year’s district meetings, I shared the latest news on the Bonneville Power Administration’s likely increase of wholesale power and transmission costs. They’ll make their final decision in late July. As of now, we’re expecting a 6% to 9% increase driven by the need for financial reserves to protect BPA’s credit rating and a loss of wholesale power sales revenues from other buyers that usually helps buy-down our cost from BPA.
Another significant factor pushing the increase closer to 9% is the cost for Oregon Governor Kate Brown’s experiment to spill more water over the top of the Columbia River hydroelectric dams instead of running that water through the turbines to generate power. Without that water to produce electricity, BPA will need to buy replacement power, which will cause wholesale power rates to go up. The regional coalition that collaborates on Columbia River hydro operations rejected Oregon’s experiment, but Governor Brown’s attorney convinced a federal judge in Portland to ignore the regional consensus on what’s best for salmon and power.
After our first district meeting in Dorena, I received a copy of a letter to the BPA Administrator signed by two Congressional representatives from Washington and Oregon each —including our own Congressman Peter DeFazio—that said: “We are concerned that plaintiffs’ [Oregon and others] continued advocacy for additional spill or preventing needed maintenance of the dams (as requested in the injunctions) is not only unscientifically based, but is also likely to be counterproductive.” I offered copies of the letter to those in attendance and I invite you to go to page 25 in the June issue or Ruralite, to read the letter.
If you’re concerned about Governor Brown’s efforts to increase your electric bill, I encourage you to sign-up for our ORECA-Action grassroots group. On our website’s front page, it’s the big yellow “ORECA” image—click on it to go to the sign-up page. Once you’ve done so, you’ll be able to add your voice to our efforts to keep your electricity bill affordable.
The December and January ice storms may have passed, but they left behind high electricity bills due to cold weather. Several members have called us to check and see if, indeed, they used that much electricity in December and January?!
What we found in talking with members was that heating with electric resistance—those glowing coils in portable or built-in heaters—drove electricity use higher. Trying to keep a home warm with outside temperatures persistently below freezing understandably made recent bills unusually high. When you have concerns or questions about your bill, please give us a call. We’re here to help you use electricity efficiently to help keep your electric bills affordable.
In fact, a key part of Lane Electric’s mission statement is “economical” rates. We live that mission. For example, we’ve done belt-tightening to live within our means when warm weather kept electric bills low and undercut our budget for system improvements.
We also actively engage our wholesale power provider, the Bonneville Power Administration (BPA), to minimize unsustainable cost increases that have out-paced inflation—28% over the last 6 years. Yet again, BPA is proposing an increase this year: a 2.3% increase for wholesale power and an average 1.1% increase for transmission. They’re also proposing a plan to build-up emergency reserve funds that would effectively ensure that our wholesale power rate would increase at least 3% for several years. We’re advocating against BPA’s plan through our generation and transmission co-op, PNGC Power, and in partnership with the region-wide Public Power Council. The outcome threatens to raise your electric bill and we take that to heart when we advocate for reasonable and justified rates.
Another factor that threatens to increase your electric bill is the outcome of the State of Oregon’s recent legal action against the federal hydroelectric system. Oregon is asking a federal court in Portland to mandate spilling reservoir water over eight federal dams on the Columbia and Snake Rivers to increase survival of the threatened and endangered fish species passing through the dams. However, survival rates for juvenile spring Chinook passing through these dams is already over 95%. All four northwest states have thoroughly debated the issue in a collaborative process, and Washington, Montana, and Idaho oppose the idea. The federal website SalmonRecovery.org tells the story.
What does Oregon’s legal action mean for your electric bill if it’s successful? Another 2% BPA rate increase. Spilling that much stored water means losing an estimated $40 million dollars of stored clean energy. It also means adding carbon to Oregon’s power supply mix because mandating more spill means BPA would need replace clean, reliable hydropower with a reliable carbon-based resource. Meanwhile, the Oregon Global Warming Commission recently concluded that Oregon is already unlikely to meet its carbon reduction goals!
As I’ve said at past annual district meetings, the benefit of hydropower comes with the responsibility for mitigating its impacts on protected fish species. Over 25% of your power cost supports fish species recovery, totaling over $15 billion for the last 40 years. Now Oregon wants you to pay more for an experiment that couldn’t gain regional consensus. Sometimes it seems like the Affordable Electric Bill needs protection as a threatened species!
This winter season is turning out to be colder than last year’s. You’ll probably use more electricity to heat your home too. A warm winter home means that your electric bill will likely be higher than last year so plan accordingly. Here are my annual tips to help you manage your bill:
Remember too, that you can give your co-op a call to talk about energy efficiency programs and ideas. We’re ready to help!
In December the Board of Directors adopted Lane Electric’s 2017 budget with no rate increase. As I’ve mentioned to you before, weather is the biggest driver for rate increases.
We’re expecting a return to normal weather pattern and we’ll find out if we’re right by the end of March. The Board took advantage of this cautiously optimistic forecast to move a decision about rates to later in the year when they can see how we did with electricity sales. This benefits the Board by giving them better information to make rate decisions with. It benefits members by avoiding a rate increase during winter—right when you’re using the most electricity—when electricity bills are naturally higher.
The Bonneville Power Administration (BPA) has proposed increasing their wholesale power and transmission rates by about 3% in October. BPA’s wholesale costs account for about 40% of Lane Electric’s expenses. We’ve been partnering with other BPA customers to urge BPA to minimize their increase. Lane Electric already faces our own cost pressures from increased fuel costs and materials. I’ll keep you posted as we learn more.
In closing, I hope you had a joyful and enjoyable holiday season. We live in a beautiful corner of the USA among mountains and water and many shades of green that offer us all a daily opportunity to appreciate life. For this New Year, make time to recognize and enjoy our beautiful home.