CEO’s Message

Manager's Message

CEO Message – November 2017

Do you shop around for the best price on the products and services you buy? So does your electric cooperative. Acquiring the most affordable electricity available on your behalf is a core business function.

Even though contracting for electricity on the wholesale power market is more complicated than buying groceries, some of the same strategies come into play.

WREC buys in bulk. Just as the price per ounce is usually lower when you buy the bigger package, you get lower rates because we combine the electricity needs of all 6,047 accounts we serve into a couple of purchases.

The vast majority of your electricity is delivered by the Bonneville Power Administration. Even though their rates have increased, wholesale electricity from BPA remains a good value because of the services included in the contract.

WREC also captures economies of scale when we make wholesale market purchases through Northwest Energy Services Cooperative. NESC is a cooperative that WREC helped create specifically to capture the combined purchasing power of an association of electric utilities spread across the Northwest.

Savings WREC achieves in wholesale power purchases help keep your retail rates down.

Using combined purchasing power isn’t confined to wholesale electricity. WREC takes advantage of volume discounts when purchasing the equipment and vehicles necessary to operate and maintain the local distribution system. Farm Credit Leasing uses the purchasing power of electric utilities across the country to negotiate directly with the manufacturers for the best possible prices on trucks and heavy equipment. WREC is also a founding member of General Pacific, a purchasing cooperative that supplies insulators, wire, transformers and other equipment necessary to build and maintain the power lines that deliver safe, reliable electricity to your homes and businesses.

WREC takes advantage of discounts. It’s not like a coupon club, but WREC members are more powerful together. Because we have so few members spread across such a large service territory, WREC qualifies for BPA’s LowDensity Discount. While intended primarily to benefit residential members, commercial members enjoy the benefits as well. The same is true of the Irrigation Mitigation Credit. Originally implemented to help keep food prices low by reducing the cost of growing food, pooling our residential electricity needs with those of our members who irrigate crops results in lower transmission rates for all.

WREC watches the market. You won’t find a Veteran’s Day sale in the wholesale electricity markets, but there are definitely times when wholesale electricity prices are lower. WREC follows both current and future market prices to help us forecast the best time to acquire electricity for you.

Lastly, WREC is a not-for-profit cooperative. In addition to the savings listed above, belonging to a cooperative saves you money in three ways. First, there are no outside investors demanding a return on their investment. Any funds collected beyond expenses are returned to the members as capital credits. Second, since there are no shareholders to satisfy, your employees are focused on making decisions that benefit our members. Third, WREC is exempt from federal income taxes, which creates a huge savings for our members.

Clay R. Fitch
Chief Executive Officer

Manager's Message

CEO Message – October 2017

Electronic devices can save you money, help you monitor the safety of your family or help you save on home energy costs. This may sound too good to be true, but many products on the market do all these things and more.

Smart security systems, for example, let you access and control your system through an app on your smartphone. Most smart security systems can be customized. You might choose a system that you can install yourself or you might choose the peace of mind that comes with hiring a professional. Some smart security systems even offer real-time monitoring as a feature.

Knowing your home is safe—no matter where you are—is comforting. Knowing your personal information is safe can also be comforting.

Making sure members’ transactions take place in the most secure environment available— no matter which way you choose to pay—is a priority for Wells Rural Electric Co.

Whether you choose to mail a check, set up recurring automatic payments, make a payment from your smartphone or tablet, pay by credit card on the web, use the SmartHub app or pay in person, WREC gives members the flexibility to choose a payment option that best fits your needs.

In the rapidly changing world of electronic payments, we regularly update our security measures to safeguard member information. For guidance, we rely on the Payment Card Industry Data Security Standard (PCI DSS), which is designed to ensure all companies that accept, process, store or transmit credit card information maintain a secure environment. Federal law requires all businesses that store, process or transmit payment cardholder data to be PCI compliant.

The PCI security compliance measures required a change in our practices and to our phone payment system. Members who pay by phone with credit or debit cards should call their local office and select option 3 from the automated menu. If members want to pay with a credit or debit card, but bypass the automated call routing, our member services representatives are required to redirect your call to the secure automated payment line.

Our website, wrec.coop, was recently redesigned based on input from members who participated in focus groups. Those members told us they wanted to be able to access their accounts quickly on the home screen, so the “Make a Payment” option is near the top of the home page. Our web-based account management option allows you to check your electric energy use, manage multiple aspects of your account and pay your bill in the most secure manner available using SmartHub.

Every member of Wells Rural Electric Company is unique, so WREC offers multiple payment option to match your unique preferences. Despite our individuality, I believe every member wants excellent service. One of the most important ways we can provide members with the best possible service is to keep your information secure.

We are committed to implementing the most current methods to do so.

Clay R. Fitch
Chief Executive Officer

Manager's Message

September 2017

The 2017 solar eclipse will occur just as this edition of Ruralite goes to print. For some, the eclipse is no big deal. Some are content with the 80% of totality that will be visible throughout the United States. Most Wells Rural Electric Company (WREC) members will experience about 90% of totality. But for some astronomy fans, nothing but 100% is enough.

The news media reports that there isn’t a rental car or hotel room to be had anywhere in southern Idaho, and prices are often five times the normal rate. There have even been stories warning shadow chasers to bring food, water and gas because the crowds are expected to overwhelm local resources and roads.

Despite those risks, about a half a million people are expected to converge on the path of the eclipse to ensure a 100% experience.

When it comes to serving our members, your Board of Directors and employees feel the same way. Regardless of our responsibilities, nothing but 100% safe, reliable and affordable electricity is enough.

Some of our efforts to serve you are very visible, such as installing energy-efficient lighting or building power lines. Other efforts, such as representing you before elected officials or negotiating wholesale power supply contracts, happen mostly behind the scenes.

However, nothing your electric cooperative does happens without your help. For example, because of your willingness to invest in LED lighting, replace windows, upgrade insulation, install premium efficiency motors and buy Energy Star appliances, together we saved an estimated 2,853,151 kiloWatt hours of electricity worth $769,583 in 2016!

We may soon need your help with another critical issue.

Water flowing through the Columbia River is managed under a plan that has been developed over the past three decades. That plan, usually referred to as the Biological Opinion (BiOp), balances the needs of fish with the needs of food growers, cargo ships, recreation, electricity consumers and Native Americans. The plan isn’t perfect, but it has been tested, litigated and revised many times to reach a consensus on what is best for listed fish.

One of the principle drivers increasing electricity rates is the cost of fish and wildlife mitigation programs. Ratepayers in the Pacific Northwest spend approximately $635 million every year to recover endangered salmon and steelhead. It’s a staggering amount—nearly a third of the Bonneville Power Administration’s annual budget—but fish populations have been steadily growing for more than a decade. Still, there are people who insist that your investment and increasing numbers of fish aren’t enough. They file a never-ending stream of lawsuits demanding actions that may actually harm fish.

WREC, and other utilities who rely on carbon-free hydroelectricity, are defending the BiOp with help from elected officials. Washington Congresswoman Cathy McMorris Rodgers has introduced House Resolution 3144, which will require river operations to follow the current BiOp until a comprehensive review can determine if a more effective plan can be developed.

We don’t know when this legislation will begin to move through Congress, but when it does, we will need you to urge Nevada’s Congressional delegation to support it.

Until then, please follow WREC on social media and check this website for additional information on this effort to control costs.

Clay R. Fitch
Chief Executive Officer

Manager's Message

August 2017

The conditions seem ripe for low energy prices. The wet winter filled the reservoirs behind the hydroelectric dams. Along the ridge lines, thousands of turbines generate power from the wind. Low natural gas prices are moderating electric rates across the country.

It seems like wholesale electricity prices should be falling, but that’s not the case.

Several issues at Bonneville Power Administration (BPA), which provides Wells Rural Electric Company’s (WREC) electricity supply, are driving a rate increase that will likely occur in October.

BPA adjusts its rates every two years due to increasing operating costs and investment in infrastructure maintenance. Initial estimates were as high as 10% but more recent estimates are somewhat lower.

Part of the rate increase will build BPA’s financial reserves, lowering its financial risks, which will allow BPA to finance debt at lower interest rates. Like WREC, refinancing debt at lower interest rates is one action BPA has taken to lessen the overall rate increase.

Another factor pushing rates up is lower demand from Northwest utilities, which decreased revenue from surplus power sales. The abundance of energy on the daily market supplied by other generators is suppressing the price of BPA’s power sales to neighboring states. BPA usually uses revenue from surplus power sales to offset costs that must otherwise be recovered through rates.

Finally, putting even more upward pressure on rates, a court order will require the Bureau of Reclamation and the Army Corps of Engineers to spill more water over the dams, despite overwhelming scientific evidence showing spill programs harm migrating juvenile and adult salmon. Increased spill also reduces the amount of water that passes through the turbines to generate renewable, carbon-free electricity.

To meet consumer demand, the lost hydro generation will force BPA to purchase power on the wholesale market, most likely from more expensive fossil-fueled generation plants. The spill could cost consumer-owned utilities millions in addition to increasing carbon emissions.

As a BPA customer, WREC has endured wholesale power rate increases in recent years due to BPA’s financial challenges. Wholesale power rates have increased by about 28% over the past eight years, more than twice the rate of inflation during the same period. With the help of Northwest Requirements Utilities, Northwest Public Power Association and other utility organizations, WREC has voiced strong opposition to BPA’s rate trajectory. We have had some success in pressuring BPA to reduce its costs, but have not been able to eliminate wholesale electricity rate increases.

Because 70% of WREC’s total costs come from purchasing power, BPA’s rate increase will drive an immediate increase in the retail rates you ultimately pay. These increases are frustrating and disappointing because we work as hard as we can to keep electricity affordable.

We are reviewing our retail rates in preparation for the wholesale price increase this fall. Once BPA announces its final rate decision, we will provide detailed information on how the increase will affect groups of members with similar usage patterns.

Clay R. Fitch
Chief Executive Officer

Manager's Message

July 2017

I feel safe saying we live in a hyper-partisan environment. This means an increasing amount of time and effort are required to reform existing bad policy or to defeat new policy proposals that would be harmful to the members of Wells Rural Electric Company (WREC). The recently completed 2017 Nevada legislative session presented many “opportunities” in this area, and I am pleased to report that the outcomes were generally positive for your electric cooperative.

Many of the ongoing challenges we face are driven by the well-intentioned policy drive to use more renewable resources to produce electricity. The value of this effort is widely debated, and reasonable people have differing points of view on both sides of the issue. But for WREC’s members, who already purchase electricity that is 96% carbon-free, obtaining more expensive renewable energy threatens only to drive the costs of electricity up with no discernible environmental benefits. WREC needs to retain its ability to act in the best interests of our members rather than comply with one-size-fits-all mandates from Carson City or Washington, D.C.

Your employees and Board of Directors work tirelessly to tackle complicated regulatory and policy issues. They analyze these issues within the ever-changing energy markets and then evaluate how those issues could impact you, our members. They have a deep understanding of the needs of the communities we serve, and they use that knowledge to ensure your needs are represented in legislative and regulatory policy-making.

Your Board, employees and industry allies have been successful protecting your interests at the state level. However, environmental issues and electricity market pressures at the regional level are causing costs to rise and revenues to decline for the Bonneville Power Administration (BPA). A proposal to sell BPA’s transmission grid is also of great concern. As WREC’s wholesale power provider, BPA’s rates for wholesale electricity and transmission have an enormous impact on the price you ultimately pay for electricity.

Despite constant pressure from utilities to control costs, BPA is moving forward with plans to raise wholesale power and transmission rates in October. We do not yet know how that increase will affect the members of WREC, but rest assured, we are diligently working to reduce the proposed wholesale power cost increases.

The ability to make your voice heard is a huge part of being a member of WREC. We don’t lobby elected officials on behalf of investors with the aim to increase profits. We work with elected officials, and enlist the support of other organizations who represent consumers and rural communities, to ensure that you will always be provided with safe, reliable and affordable electricity. That is the cooperative difference.

Clay R. Fitch
Chief Executive Officer

Manager's Message

June 2017

Nominations for Board of Directors to Open

Nominations for four seats on Wells Rural Electric Company’s (WREC) Board of Directors will open on Monday, June 12, 2017. The incumbent Directors’ seats subject to election are currently held by Gerald Anderson, Kirk Dahl, Lois Nannini and Bruce Widmer.

Nominations must only be made on the 2017 Board of Directors Election Nomination Form available at all WREC offices and on www.wrec.coop. All mandatory questions must be answered in order for the nomination to be valid. Completed nomination forms must be received by General Counsel, Gary E. DiGrazia, 530 Idaho Street, Elko, Nevada 89801 or General Counsel, Gary E. DiGrazia, P. O. Box 1358, Elko, Nevada 89803 or e-mail gdigrazia@frontiernet.net or Fax (775) 738- 4220 no later than 5:00 P. M. Pacific Time Zone on Monday, June 26, 2017. It is the responsibility of the candidate to ensure receipt of the nomination. Late nominations will not be placed on the ballot.

Any member in good standing for a minimum of one year may nominate another eligible member, himself or herself, (“the nominee”) for Director using the approved form. The nomination must be signed and dated by both the nominee and the person making the nomination, if other than the nominee. Nominees must verify their membership by providing their name and contact information.

To be eligible for election to the Board of Directors, non-incumbent nominees must attend a mandatory informational workshop on Thursday, June 29, 2017 at 1:00 P. M. Pacific Time Zone at the WREC Headquarters, 1451 Humboldt Avenue, Wells, Nevada 89835.

The nominee must not have been adjudged guilty of a felony within the prior seven years.

The nominee must be of legal voting age.

The nominee must be a member or spouse of a member, or a local officer, director, partner, official or manager of an entity that is a member. An entity is a partnership, corporation, limited liability company, firm, association, business trust, personal trust, body politic or subdivision thereof, or other multiple ownership-type business structure. No more than one person may serve on the Board based upon any one membership.

The nominee, or his/her entity, must not have an unpaid account with WREC which has been outstanding for more than ninety (90) days. The nominee, or his/her entity, must not have an account written-off as a bad debt by WREC within the prior five (5) years.

The nominee must not be a current employee of WREC or a former employee who has retired or was dismissed less than five years prior to the close of nominations. The nominee, or his/her entity, must not have been the subject of a Ruralite Feature Story article since February 16, 2017.

Additional voluntary information, including birth year, birth place, years in WREC service area, occupation, years on WREC Board, spouse name and children(s) name(s), may be included. Education and training credentials, not more than 300 characters and spaces, may also be included. The Company reserves the right to edit.

The nomination must be accompanied by a photograph of the nominee suitable for use in preparing the ballot package. General Counsel shall determine the eligibility of each nominee.

Clay R. Fitch
Chief Executive Officer

Manager's Message

April 2017

Details of specific proposals vary, but the essence of most political debates boils down to a basic question: “Who gets to decide?” Whether Wells Rural Electric Company (WREC) is working to persuade your representative in the Nevada Legislature or the United States Congress, the essence of our message is, “Our members decided to invest in an electric cooperative to provide safe, reliable and affordable electricity. Our members vote to decide who represents them on the Board of Directors. Any legislation should respect our members’ investment and their right to make decisions for themselves.”

Backers of Question 3, dubbed the “Energy Choice Initiative” on the November 2016 general election ballot, made some lofty promises: lower bills, more renewable energy, more jobs and a choice of electricity providers.

It may not be obvious when you pay your monthly bill, but WREC fulfills all of those promises every day. Here are some examples.

WREC purchases its wholesale power supply from Bonneville Power Administration (BPA). While we have serious concerns about BPA’s rising costs, it has historically been a reliable source of affordable electricity. In fact, utility rates across the Pacific Northwest are among the lowest in the nation. The decision your elected Board members made to purchase wholesale electricity from BPA and to control local costs fulfills the promise of lower bills.

About 85% of the electricity you use is generated by hydroelectric dams. An additional 1% is generated by wind. WREC also integrates local sources of renewable energy through our net metering policy. In total, about 86% of the electricity you use comes from renewable resources. That percentage far exceeds any Renewable Portfolio Standard adopted for Nevada and fulfills the promise providing renewable energy.

The promise of more jobs is often made in conjunction with the promise of a more diversified economy. Rather that collect money through rates to “create” jobs, the strategy of your Board of Directors has been to keep electricity affordable so you can support local businesses, and those businesses can then create jobs in every sector of the economy.

Finally, lets consider the promise of choice of providers. It’s possible that some of our members with large loads could make electricity purchases from the wholesale market. Some may even be able to arrange delivery through multiple owners of various components of the transmission grid. However, to get a competitive price, most of us would need to join a collection of other consumers so that we could buy in bulk. WREC has always provided that service. It isn’t just a small collection of your friends or business associates, its a pool of 4,072 members in Tooele, Elko and Eureka counties who, through their membership in WREC, have made a collective promise to each other to purchase all of their electricity together to achieve the best possible price.

There is a possibility that Question 3 could create some opportunities for WREC members. Our promise is that your electric cooperative will capitalize on any opportunities on your behalf. We always have.

Clay R. Fitch
Chief Executive Officer

Manager's Message

March 2017

Punxsutawney Phil is wrong more often than he is right, but I still heard a collective groan over the prospect of six more weeks of winter weather. We were all running out of places to pile snow. Cold weather can leave some members struggling to manage their energy use and the higher bill that results.

We cannot control the weather, or count on a groundhog’s forecast, but we can control our energy usage. Two very effective tools for managing energy usage are conservation and energy efficiency. Wells Rural Electric Company’s (WREC) informational materials and programs often link these two terms, but there are important differences.

Conservation is achieved when changes to our everyday actions, like adjusting the thermostat setting or only running full loads of laundry, reduces our energy usage and, therefore, your bill. A great resource for conservation strtegies is touchstoneenergy.com.

Improvements in energy efficiency help reduce energy usage by utilizing devices that perform the same task with less energy. Purchasing and installing an Energy Star clothes washer provides clean clothes with less energy.

To further illustrate the difference, let’s consider lighting. Conservation would be remembering to turn the light off or opening blinds to replace electric light with sunlight. Energy efficiency would be installing a motion sensor switch so you don’t have to remember to shut the light off. You can also replace incandescent lightbulbs with high-efficiency LED’s.

Shop for energy efficient products locally. If you don’t find what you need, click the Conservation Central tab on wrec.coop for access to a broad range of energy-efficient lighting choices, water heaters, showerheads and smart power strips.

As the weather turns warmer, many of us will be starting projects outside. Most of WREC’s power lines are energized at 24,900 volts. If you are trimming trees, moving ladders or using tall equipment, look up and live! If you are digging, even something a simple as planting trees and shrubs, call 811.

It’s risky to make assumptions about the location of underground utilities. The depth of utility lines vary, and there may be multiple utilities in a common trench. Digging without calling can result in serious injuries to you and those around you. It can also disrupt service to an entire neighborhood and result in fines or repair costs. For safety’s sake, please call before you dig. It’s simple, easy, convenient and it’s the law.

Clay R. Fitch
Chief Executive Officer

Manager's Message

February 2017

The concept of “disruption” is finding its way into nearly every discussion about the way your cooperative provides electricity to its members. Disruption can occur on several fronts.

One is the emergence of technologies that give consumers the ability to get some or all of their electricity from sources other than their local electric company. Other examples include account management by a third party and direct wholesale market purchases.

Battery storage is an example of a “disruptive technology”. Battery design is advancing to the point that some researchers think we are just a few years away from systems that could store solar energy for use at night, essentially enabling consumers to move off the grid.

While we can debate the likelihood of a technological breakthrough that would replace poles, wires and power plants, there is no question that our business is being challenged as consumers take a more active role in choosing their source of electricity, reducing their electricity consumption and adopting innovative ways to manage their accounts.

Challenges are nothing new to Wells Rural Electric Company (WREC). In fact, WREC was formed to meet the challenge of providing electricity to communities no other company was willing to serve. Our history of solving past challenges provides a solid foundation for meeting the challenges of the future. For the past several months, your Board of Directors and staff have been developing plans to serve your rapidly changing needs. Through our strategic planning process, we established seven goals to chart a course for the next five years. The goals provide a vision of the future. We will reach those goals through initiatives, programs and projects that focus on our members year after year. Those goals include:

  1. Enable WREC members to control their use and develop rates to ensure that WREC can meet its financial obligations.
  2. Develop policies that protect WREC’s financial strength should unforeseen load reductions occur.
  3. Develop recommendations to maintain adequate voltage and capacity.
  4. Continue to achieve a high degree of reliability through operational planning, construction and system analysis.
  5. Develop an assessment of wholesale power supply needs under the current contract with Bonneville Power Administration through 2028, and beyond.
  6. Define and develop programs and services that meet member needs.
  7. Demonstrate a Culture of Safety within WREC and its membership.

While we work toward these long­term goals, we will remain focused on our daily commitment to provide safe, reliable and affordable electricity.

Clay R. Fitch
Chief Executive Officer

Manager's Message

January 2017

A knife is a very simple tool. It’s just a blade and a handle. Despite that simplicity, a knife has incredible versatility, from peeling an apple or cutting a steak to carving wood or removing a splinter. A knife’s usefulness depends largely on your needs.

A cooperative is a very simple concept. It’s just a group of people working together for mutual benefit. Despite that simplicity, a cooperative is incredibly versatile and powerful, from processing and marketing cranberries or milk to providing trustworthy childcare or banking services.

Your electric cooperative, Wells Rural Electric Company (WREC), is like the Swiss Army knife of cooperatives. WREC does as many things as that iconic red knife and, like the tweezers hidden in a notch in the case, you might not be aware of all of its functions.

Wholesale Power Purchases – To meet your need for electricity, WREC purchases electricity from Bonneville Power Administration (BPA) and from the wholesale power markets. WREC uses its membership in another cooperative, Northwest Energy Management Services, to leverage the buying power of other cooperatives across the Pacific Northwest to secure the best pricing.

Aggregation – Wholesale power markets sell in large quantities called megaWatts (mW). According to the Energy Information Administration, one mW is enough electricity to power about 680 homes. WREC forecasts the amount of electricity we expect all of our members to use and makes that purchase. Contracts are in place to purchase electricity on your behalf until 2028. Like buying products in bulk, buying electricity for all of our members as a group allows WREC to secure better pricing for individual members than they probably could negotiate on their own.

Transmission – Preparing a forecast and buying wholesale power is only a small piece of the puzzle. Only a small fraction of the electricity we consume is produced within our service territory. The rest must be delivered over hundreds of miles of transmission line owned by other companies like BPA, Idaho Power and NV Energy. Long standing contracts are in place to ensure reliable delivery of wholesale electricity.

Distribution – Wholesale electricity is delivered to WREC at 138,000 volts. WREC’s substations convert 138,000 volts to 24,900 volts and our distribution power lines deliver it to your neighborhood, where transformers convert 24,900 volts to 240 volts for most homes and 480 volts for most businesses.

Reliability – The complex network that delivers electricity to you needs periodic upgrades or replacement, routine maintenance and occasional repairs. We are proud to report a 99.994% reliability rating.

WREC also provides energy efficiency programs and rebates, electrician services, automated account management, economic development, sponsorships for community organizations and programs for low ­income members. We are always looking for opportunities to serve you better and provide greater value for your energy dollar.

Clay R. Fitch
Chief Executive Officer