Manager’s Message

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.

Manager's Message

Manager’s Message – February 2017

Dear Co-op Community Members:

Down the Line

What does it mean to be a member of a co-op community in today’s world and, specifically, an electric co-op community? More than you may realize.

First, a co-op is a not-for-profit organization. Rate increases don’t maintain a profit for shareholders. The co-op exists to provide service to its members at cost.

Second, a co-op is a federal tax-exempt organization. This helps keep your electricity costs lower because the co-op doesn’t pay a federal corporate income tax.

You may have heard about investorowned utilities returning money to their customers in 2018 because the company expects a smaller income tax bill. Those customers will now get to experience what electric co-op members experience every year with capital credits. If in any year Lane Electric collects more in rates than is needed for expenses, capital credits are allocated to each member based on electricity use.

Third, a co-op’s core principles and values are embodied in the Seven Cooperative Principles: 1. Voluntary and Open Membership 2. Democratic Member Control 3. Member Economic Participation 4. Autonomy and Independence 5. Education, Training and Information 6. Cooperation Among Cooperatives 7. Concern For Community Lane Electric Co-op is a grassroots community business. As a co-op member, you have a voice in the co-op, which exists to serve you, its member. You elect community-minded

neighbors to serve on Lane Electric’s seven-member board of directors. They, in turn, hire a general manager to prudently oversee and plan co-op operations.

How does this all affect the recent $4 increase to Lane Electric’s fixed basic charge for all rate classes? The increase is needed to provide service at cost, not for profit. The Lane Electric Board of Directors reviewed staff’s budget proposal in depth to provide transparency into the budgeting process.

The board concluded additional revenue was needed to maintain the financial health of the co-op.

An increase to the fixed charge instead of the kilowatt-hour use charge avoids overcollecting money from members if unusual weather causes greater electricity use.

Lowering the single-phase demand threshold to 31 kilowatts fairly allocates more cost to those members using greater system capacity.

In other words, when a rate increase happens for Lane Electric Co-op community members, it happens because it is the responsible thing to keep the co-op financially healthy for its community.

Don’t forget to check the Capital Credits to see if you have capital credit money to collect.

Matt Michel, General Manager

Manager's Message

Manager’s Report – January 2018

Down the line

Dear Co-op Community Members: This winter is shaping up to be colder than recent years and thankfully without a major ice storm like the Pre-Christmas Iceaggeddon last year that knocked us all for a loop. As I write this a week before Christmas, I hope I haven’t jinxed our good fortune of no major storm! As you weather this winter, remember that your electric Co-op is here to help you manage your electric bill. For example, you can track your usage online with SmartHub, manage your bill with Pay As You Go, or give us a call to talk about energy efficiency programs and ideas.

In November, I let you know that the Co-op’s financial health allowed the Board to avoid a rate increase this winter when your electric bill naturally goes up, and that in April increasing costs would cause a rate increase for the first time in over a year. Effective on bills printed on or after April 1st, there will be a $4.00 increase to the monthly Basic Charge for all rates classes. For those single-phase account with a demand billing component—typically commercial accounts—the threshold for billing the Demand Charge will decrease from over 50 kW to over 31 kW.

What is driving the need to increase rates? Increased wholesale power costsaccount for nearly one-third of it, including a new fish spill surcharge caused by the State of Oregon’s lawsuit against the federal agencies that manage the Columbia River federal hydroelectric system to mitigate for fish impacts.Another one-third of it comes from staffing changes to improve the meteringsystem and enhance our

line extension design services for members. The remainder is driven by inflationary health care costs, improvements in our safety education program, and more energy assistance grants. Charging for kW demand at the lower threshold point of 31 kW and above will help account for the trend of higher peak capacity use.

There’s more timely news I want to share with you. The January retirement of two longtime Co-op employees: Wayne Schvaneveldt and Dave D’Avanzo.

Wayne retired in early January after over 38 years at the Co-op! Quite a run, Wayne!

Wayne was the friendly and helpful serviceman for you up the McKenzie and out in Dorena. His soft-spoken, kind, and steady presence at the Co-op will be missed. May your retirement bring you well-deserved happiness and joy, Wayne.

Dave D’Avanzo will retire at the end of January. Many of you have worked, and laughed, with Dave since 2002 in his role as the face of the Co-op in your community. Dave is a larger-than-life guy who is great to have around. His Lane Electric family and the entire Oregon electric cooperative family will miss him as he and his wife write the next chapter of their lives together. Best wishes on your retirement, Dave.

Matt Michel, General Manager

Manager's Message

Manager’s Message – November 2017

Dear Co-op Community Members:

Down the line

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

Manager's Message

Manager’s Report – October 2017

Down the line

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.

Matt Michel,
General Manager

Manager's Message

A Look At BPA Rate Pressures…

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.

Manager's Message

Know What’s Below…

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!

Matt Michel,
General Manager

Manager's Message

Odds-n-Ends

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.

Matt Michel,
General Manager