CEO’s Message

Manager's Message

CEO’s Message – April 2019

A Story in Just Six Words

Headshot of Clay FitchThere is a legend that Ernest Hemingway once bet his dining companions that he could write a story in six words. He reportedly wrote, “For sale: baby shoes, never worn” and collected $10 from each person at the table.

The concept of flash fiction has inspired other powerful six-word stories such as, “Cursed with cancer, blessed with friends,” “I still make coffee for two,” “It did not go as planned,” and “She did it the hard way.”

I’m no Hemingway, but I can tell you the story of Wells Rural Electric Company (WREC) in six words: “People wanted electricity. They worked together.”

The sequel is just six words as well: “Working together is better for everyone.”It may seem like merely a philosophical statement, but we are actually working together in more ways than one.

For example, you have an opportunity in June of each year to nominate yourself or a fellow member to serve on the board of directors. As the top decision-making body, the board you elect creates policies and sets rates to ensure that safe, reliable, clean and affordable electricity keeps flowing to your homes and businesses. Your Board is working together for you.

As members, you are working together to invest in your company. It’s easy to think of your electricity bill as just another bill, but it’s more like a mortgage statement. While the majority of your bill is the cost of wholesale electricity, a portion of your bill pays interest and principle. Just like your mortgage, you are building equity in an asset. In this case, the asset is the cooperative that delivers electricity to you at cost.

Unlike your home equity, the money isn’t tied up until you sell your home or take a home equity loan. A portion of your equity is refunded each year through the capital credit check you receive. The capital credit system uses equity collected last year to refund a portion of the equity collected in previous years. In this way, even the newest members are investing in their cooperative while the investments made by earlier members are gradually repaid.

Not only is your equity invested in upgrading and maintaining the grid, it is invested in the equipment and buildings necessary for your employees to put your assets to work.

A few of us still think of the headquarters building on Humboldt Avenue as the “new building” because we began our careers with WREC in the “old building” on Lake Avenue. Through diligent maintenance and small renovation projects, this building has been serving your needs for 33 years. Parts of the distribution grid have been serving you for 61 years.

Your board and employees take pride in being good custodians of the assets you entrust to us. Your cooperative is financially sound. Physical assets are well maintained. Long-term power supply contracts help keep rates affordable. Budgets are wisely invested. Strategic planning prepares your cooperative for the future.

That future can also be summarized in six words, “Meeting the changing needs of members.”

My fellow employees and I thank you for the privilege of helping you create a more powerful future together.

Clay R. Fitch
Chief Executive Officer

Manager's Message

CEO’s Message – March 2019

Caring About Our Community

Headshot of Clay FitchAuthor Anthony J. D’Angelo observed that, “Without a sense of caring, there can be no sense of community.”

D’Angelo’s thoughts reflect Wells Rural Electric Company’s philosophy toward our members and the broader community we serve. As a not-for-profit cooperative, we have a different “bottom line.” While our priority is always to provide safe, reliable, clean and affordable electricity, there is another important part of this equation: your well-being and that of our friends and neighbors. To your Board of Directors and employees, you are not just a customer, you are a member and the only reason WREC exists.

WREC was founded to fulfill a vital need in our community that would not have otherwise been met. Concerned local leaders came together to build your cooperative.

At that time, nearly all members understood that WREC was different because they likely knew someone who helped create the cooperative. For many members, WREC’s founding and the circumstances of the time are unknown. Over the past 61 years, some members may have come to think of WREC as simply an energy provider. But WREC is so much more. WREC is a cooperative that is constantly evolving to meet the changing needs of the members and communities we serve.

WREC is always looking at changes in the energy environment, evolving technology and shifting member expectations. For example, one of your fellow members who became a drone pilot is featured in “An Eye in Northern Nevada’s Sky”. The use of drones to inspect power lines is quickly becoming an industry standard. “Save Energy With Easy Home-Improvement Projects” explains several easy do-it-yourself projects to help you reduce how much electricity you use for heating. This is especially important as cold winter temperatures demand more electricity to keep our homes and businesses warm. “SmartHub App Puts Power at Your Fingertips” has information about using our mobile app to manage your account when it fits your schedule. Finally, “YES Camp? Yes, Please” illustrate our long-standing commitment to our youth.

The founding Board of Directors in 1958 included, back row from left: Eyre Boies, John Moschetti, Charles Read, D. Vernon Dalton, Roger Smith, Blaine Sharp and Herbert Uhlig. Front row from left: Charles Ballew, James L. Ballard, Robert R. Wright and WREC’s first general manger, George Blackett. Wells Rural Electric Company Archive Photograph

As members, you guide the decisions we make to improve and enrich our communities. Your questions and comments help us better understand your needs. Most importantly, you have an opportunity every year to vote for candidates for the Board of Directors. The Board is comprised of members of the cooperative and community just like you.

As a local business, we have a stake in the community. That’s why we support local service organizations, charities and community events. When you support these efforts, you are also supporting the community and making it a better place for everyone.

While times may have changed, our purpose and outlook have not. By working together, we can accomplish great things for our community now and into the future.

Clay R. Fitch
Chief Executive Officer

Manager's Message

CEO Message — February 2019

Ice falls in sheets and wires spring back after a lineman uses an insulated “hot stick” to knock ice off the power line. See more ice-storm photos in the article “The Ice Storm Cometh”. Photograph courtesy of Jacob “Magurt” Manning

Thick fog and bitter cold temperatures for days on end blanketed power lines in heavy ice. The weight of the ice not only took a toll on the power lines, it shredded branches from trees which often fell on the power lines as well.

It’s been a long battle for line crews fighting to keep electricity flowing despite unusual winter weather. Ice accumulation on power lines, as much as four inches thick, and nearby trees led to numerous “bumps” and several outages in mid-January.

In every column I write, my goal is to help you understand what is happening at your electric cooperative. One situation our line crew encountered illustrates why the ice buildup was such a challenge.

A member called our 24-hour customer service center at 1-800-566-6696 to report an outage. When crews arrived, they found that the weight of the ice on the overhead wires had pulled an anchor out of the ground. Without the anchor, the wires lost tension and slapped together causing a short circuit. Normally, crews would install a new anchor and restore safe clearances but the ground was frozen so hard that even our most powerful digger truck couldn’t drill through. Imagine that scene. The ground is so solidly frozen that crews couldn’t dig through it but the weight of the ice pulled an anchor out anyway.

Our crew had to come up with “Plan B”. They hauled in a 4,800 pound concrete road barrier to serve as a temporary anchor. They used trucks and winches to pull the wires back into place and connected the guy wire to the barrier. By morning, the ice had thickened so much that the weight bent the pole, drug the concrete block forward and stood it on its end. Time for Plan C.

In many respects, the power lines held up miraculously well under unprecedented conditions. In other cases, the ice exposed places where improvements are needed. For now, we are making essential repairs. Once the weather improves, we will focus on making the system even more reliable and resilient.

Keeping the grid on and making repairs required a Herculean effort. We appreciate our members who reported outages by calling 1-800-566-6696. Your calls helped crews pinpoint the trouble spots and restore power as quickly and safely as possible. Crews worked tirelessly, with support from office staff, to remove ice keeping your homes warm and your businesses open.

Clay R. Fitch
Chief Executive Officer

Manager's Message

CEO Message — January 2019

Headshot of Clay FitchI could have easily closed a pop-up ad I recently encountered, but the headline was troubling. The banner read, “Secrets your electric company doesn’t want you to know …”

I know better than to fall prey to click bait, but in the aftermath of Question 3, I’m unusually suspicious of propaganda against electric companies. Essentially, the ad claimed that your electric company doesn’t want you to install solar panels because it would cut into its profits.

While that claim may be true in some cases, it’s not true for your member-owned, not-for-profit electric cooperative. In fact, Wells Rural Electric Company (WREC) adopted a net metering policy long before such policies became an industry practice or were required by legislation.

WREC’s net metering policy enables members who generate less than 50 kiloWatts to offset their usage with electricity they produce. In rare cases where a member produces more electricity than they use, WREC will purchase the excess electricity at the wholesale rate.

Only eleven WREC members currently utilize the net metering policy. While I don’t know all of the reasons why there has been limited adoption of solar in our service area, I do know that our low cost for electricity yields a longer return on investment, and our access to clean, renewable hydroelectricity already provides the same environmental benefits.

As is often the case with technology, we will probably see more members install solar as the industry matures and the costs come down. However, it’s no secret that you can reduce your monthly bill, and you don’t have to wait until you can install solar panels. Start saving today with energy efficiency and conservation.

One of your employees likes to say, “Our best kept secrets have been published.” In the case of energy efficiency and conservation, we were promoting those well-established programs when I began my career 37 years ago.

Our programs have evolved over time, but the philosophy behind them has remained constant: WREC provides safe, reliable, clean and affordable electricity. Energy efficiency and conservation immediately reduce your individual usage. When adopted by many consumers, energy efficiency and conservation help keep wholesale prices affordable.

As I write this column, we are just a couple of days away from the winter solstice and the longest night of the year. Our use of electricity for light and heat often increases during long nights and cold days. While I don’t want to discourage anyone from enjoying the comfort and convenience of electricity, I do want you to get the most from your energy dollars.

Visit www.wrec.coop for a complete list of rebates available to qualifying members for installing energy efficient-lighting, appliances, windows and insulation. Even if you have taken advantage of WREC’s programs in the past, advancements in technology—especially in LED lighting—probably make it worthwhile to upgrade some of the devices around your home or business.

Best wishes for a bright and prosperous New Year!

Clay R. Fitch
Chief Executive Officer

Manager's Message

CEO Message — December 2018

Thank you for keeping electricity safe, reliable, clean and affordable by voting No on Question 3. We appreciate your overwhelming support!

Best wishes for a joyous holiday season!

Clay R. Fitch
Chief Executive Officer

Text over outline of state of Nevada: WREC thanks all who voted No on Question 3. Your voice made a difference.

Manager's Message

CEO Message — November 2018

Headshot of Clay FitchThe job of providing our members with safe, reliable, clean and affordable electricity is your cooperative’s top priority. But this job requires a lot more than stringing and maintaining power lines throughout our service territory. It requires political engagement. That may seem far removed from our core mission, but it is absolutely essential to serving you, our members.

This has never been more true than now. The 2018 election will change the political landscape and the way we serve you, our members.

In addition to encouraging members to vote in the annual election for your Board of Directors, I have always encouraged cooperative members to participate in national, state and local elections. Educating voters, political candidates and elected officials about the important role played by electric cooperatives in their communities is critical to your cooperative’s continued success.

Electric cooperatives have a unique advantage. As cooperatives, the civic virtue of voting is in our DNA. We show Concern for Community—one of the Seven Cooperative Principles—through participation in our democracy.

Cooperatives have another advantage. Elected officials and decision-makers across the political spectrum trust us because the goals of the cooperative and the needs of the members are the same. When we all get involved, we can make things happen politically and in our local communities.

No on 3. Risky and Costly.Your participation in this election will help ensure rural issues remain part of the local, state and national discussion and are supported by our elected officials. However, I’m not asking you to get involved just for your cooperative. This election is about protecting your rights as a member of your electric cooperative by voting No on Question 3.

By the time you read this article, early voting will have been available for a couple of weeks and should still be available for a few more days. Election Day is November 6. Please commit to voting this year.

We look forward to seeing you at the polls.

Clay R. Fitch
Chief Executive Officer

Manager's Message

CEO Message — October 2018

Headshot of Clay FitchThe future is in your hands. For months, Wells Rural Electric Company (WREC) has worked with a large and growing coalition that has been providing information about Ballot Question 3. We have been diligently urging everyone we encounter to vote “NO”. This massive education effort seems to be working. You may remember that Question 3 passed in 2016 with 72% in favor and 28% opposed. A recent poll by the Reno Gazette Journal (RGJ) found that 51% of likely voters now oppose Question 3. However, the only poll that really matters is the election that ends November 6.

While 51% now opposed gives me hope that your electric cooperative will still be able to deliver safe, reliable, clean and affordable electricity after this election, the margin of error for the poll is 4.4%. Statistically, this election could easily go either way. From a practical perspective, it means that the passage or failure of Question 3 will be determined by who actually votes. Your vote will make a difference.

You can check if you are registered to vote on the website for the Nevada Secretary of State. If you are not registered to vote, please consider registering at the Registering To Vote page on the Nevada Secretary of State website. Online registration is available through October 18. You can also register by mail and at some state agencies, including the Department of Motor Vehicles, through October 9. Registrations can be completed at the County Clerk’s Office until October 16.

Early voting opens Saturday, October 20 and ends Friday, November 2. Election Day is Tuesday, November 6. Vote at your convenience, but please vote!

The RGJ poll also found that about 16% of voters were unsure about how to vote. If you are undecided, I again urge you to vote NO.

The article “Question 3 Threatens Rural Nevada” contains a partial list of organizations opposed to Question 3. A full list of organizations, local governments and individuals urging everyone to vote NO on Question 3 can be found on NOon3.com. While some of these organizations often take very different positions on other issues, they all agree that Question 3 will be bad for their members.“Question 3 Threatens Rural Nevada” provides some compelling reasons why each of us should vote NO on Question 3.

The mayors who serve our communities in Nevada have heard the arguments both for and against Question 3 in several forums. Most notably, both sides of Question 3 have been presented three times at the Nevada League of Cities. Messages from the mayors of Carlin, West Wendover and Wells are in the article “Local Leaders Say No on 3”.

AARP has 342,000 members in Nevada. A letter urging AARP members and all citizens of Nevada to vote NO appears on page 25.

A letter outlining why the Nevada Mining Association is opposed to Question 3 has been printed in “Nevada Mining Association Testimonial Regarding Question 3. The positions of the Nevada Cattlemen’s Association and the Nevada Farm Bureau appear in “Nevada Cattlemen’s Association And Nevada Farm Bureau Testimonials Regarding Question 3”.

These organizations, and numerous others, have been instrumental in spreading the word about the damage Question 3 could cause.

Please help us ensure that all WREC members understand Question 3 and are registered to vote by talking with your friends and neighbors, putting up yard signs, wearing buttons or by putting a bumper magnet on your car. Pick these items up at your local office or click the “request a yard sign” button on www.wrec.coop.

Vote to keep electricity safe, reliable, clean and affordable by voting NO on Question 3.

Clay R. Fitch
Chief Executive Officer

Manager's Message

CEO Message – September 2018

Headshot of Clay FitchAn advertisement for Question 3 suggests that you “break-up” with your power company if you don’t like the rates or the service. The ad makes it sound so simple. But Question 3 won’t lead to a break up, it will lead to a divorce—a long, nasty and expensive divorce. Question 3 raises three difficult questions similar to those that must be settled in a divorce: Who will have custody of the children? What about our house? How will we manage holidays and family events?

Let’s consider custody first. As members of Wells Rural Electric Company (WREC), you have always had access to safe, reliable, clean and affordable electricity. If Question 3 passes, WREC will probably be forced to terminate—or be prohibited from extending—our long-term wholesale power supply contracts. That will force you to find a new electricity provider. Question 3 advocates claim competition will drive rates down. In your case, you will be forced to leave your not-for-profit, tax-exempt, cost-based electric cooperative for profit-driven electricity providers subject to income taxes. I can’t see how that will reduce your costs. You might even begin to receive two bills: one for electricity and a separate bill for delivering it to your home or business.

Next, a judge will likely decide how we will split the house. In the case of Question 3, the “house” is the value of all of the generation plants and long-term contracts held by all of the utilities. It’s a really big house because some of those contracts were intended to provide stable rates for as long as 50 years. Consumers will be stuck either with the cost of fulfilling those contracts or paying the termination costs. That cost has been estimated somewhere between $4 and $7 billion. That’s not a misprint. It’s billions. The range is so varied because no one can accurately predict the sale price of the house since there are no comparable sales. The sale price will also be heavily influenced by an arbitrary deadline to close the deal.

When California deregulated, that cost was about $20 billion, which had to be financed like a mortgage. Sixteen years later, Californians are still paying an approximate 10% surcharge for the mortgage. You could think of that surcharge as alimony.

More often than not, the divorced couple still has to get along for the sake of their children. Question 3 will create a similar situation in that the wires from your existing utility will still be connected to your home or business. Those wires will be delivering electricity from another provider. Not only will you have a new relationship with a new spouse, your electric cooperative will have to have a relationship will all of those new spouses.

Question 3 attempts to address several issues important not only to Nevada, but to the nation. Those issues include incorporating more clean energy, consumer protections, rate fairness, self-generation, energy supply and pricing, and the role of legislative and regulatory bodies. These are not simple issues and there are no simple answers.

These questions, and many others Question 3 will raise, will require the kind of compromises that must be negotiated through the mediation only the legislative process can provide. If we, as a state, decide deregulation is the correct path for Nevada, that process should begin in the legislature, not with a constitutional amendment. Instead of reconciling any differences, passage of Question 3 will drag us all into divorce court. Please vote no on Question 3.

Clay R. Fitch
Chief Executive Officer

Manager's Message

CEO Message – August 2018

Headshot of Clay FitchQuestion 3 is weighing on me like no other issue I have ever confronted. In my entire career, I haven’t had to deal with a threat to your supply of safe, reliable, clean, affordable electricity that comes anywhere close.

Proponents for Question 3 claim that retail competition will provide more choices and lower rates. One advertisement says, “If your power company raises your rate, break up with it.”

Consumers in Texas are finding out that it isn’t that simple. A headline in the Houston Chronicle on June 7, 2018 read, “Electricity prices expected to skyrocket this summer.” The article which followed explained, “Consumers hoping to find better deals when their electricity contracts expire are in for a shock as retail prices have soared in anticipation of hot weather, potential power shortages and spikes in wholesale electricity prices. The low teaser rates for consumers available just a month ago have disappeared.”

If Question 3 passes, I worry that we will read that same headline in the High Desert Advocate, the Wells Progress, the Wendover Times and the Elko Daily Free Press.

Consumers in Massachusetts have had their own problems with deregulated power marketers. According to Massachusetts Attorney General Maura Healey, “Competitive electric suppliers promise big energy savings but are actually burdening customers with hundreds of dollars in extra costs. In two years, Massachusetts residents lost over $176 million to these predatory companies. I’m calling for an end to this industry because that’s the best way to protect our seniors, low-income residents, and minority communities from these persistent scams.”

I personally heard the most damning quote of all in January. The Public Utilities Commission of Nevada held ten days of workshops to gather information about implementation of Question 3. Since it was a workshop, anyone and everyone was welcome to testify, and many did. Joe Reynolds, Chair of the PUCN, asked a lot of pointed questions. One was, “Will Question 3 guarantee lower energy costs?” The hesitant response from a proponent was, “[Question 3] doesn’t say that it guarantees reduced prices … I want to be careful that we’re realistic about what can happen.”

There is an adage which says, “We are free to make choices but we are not free to choose the consequences.” If that is true, and I believe that it is, then I urge you to make the choice that will have the best consequences.

When it comes to ballot question 3, Wells Rural Electric Company already delivers on all the promises “Energy Choice” proponents are making to get you to vote yes. While I admit that “choice” is a great buzzword, I think you should consider making these choices instead by voting no on question 3.

Choose your bank account.

If Question 3 passes, monthly bills will go up, especially for residential members.

Choose the constitution.

“Energy Choice” doesn’t belong in the state constitution. Voting yes means it would take a minimum of six year to implement changes.

Choose your cooperative.

WREC formed 60 years ago because other utilities couldn’t deliver electricity to our territory at affordable rates and still turn a profit. That remains true today. Voting no on Question 3 is a vote to keep cost-based power in your hands.

Protect the choices that really matter. Vote no on 3.

Clay R. Fitch
Chief Executive Officer

Manager's Message

CEO Message – July 2018

Headshot of Clay FitchIn her book, “Out of Africa” Isak Dinesen wrote, “… the Earth was made round so that we would not see too far down the road.” At the moment, I wish I could see so much further.

Question 3, also known as the Energy Choice Initiative, asks you to approve a constitutional amendment giving every citizen of Nevada the right to choose where you buy electric energy. While I can see how the amendment can guarantee that right, I can’t see how it can guarantee that ability.

What’s the difference? The constitutional amendment can’t force anyone to sell you electricity, so you might not be able to choose another provider. You might also lose the one choice that has been providing safe, reliable, renewable and affordable electricity for the last 60 years, Wells Rural Electric Company (WREC).

Before anyone accuses me of using scare tactics or just looking out for myself, please let me show you what I can see at the moment.

Question 3 will, “… provide by law for the establishment of an open, competitive retail electric market that prohibits the granting of monopolies and exclusive franchises for the generation of electricity.” (emphasis added) At face value, the amendment shouldn’t impact WREC’s daily operations because your electric cooperative doesn’t generate electricity, it delivers electricity.

WREC obtains some of the most affordable electricity in the nation from the Bonneville Power Administration (BPA) and delivers it to you at cost. Regardless of whether Question 3 passes or fails, the poles and wires you own as a member of your cooperative will probably deliver any electricity you might be able to purchase. If so, WREC will still need all of its existing employees, facilities, vehicles and equipment to deliver electricity.

So how could Question 3 jeopardize your access to low-cost electricity from BPA? Question 3 promises a, “meaningful choice.” That term isn’t defined, but in other States that have deregulated, incumbent utilities were forced sell their generation assets and cancel their power supply contracts because new providers couldn’t compete initially.

If you’re scratching you head at this point, you’re not alone. Backers of Question 3 claim that “competition” will result in lower rates, but if your current supplier has to be pushed out of the market so new competitors can get a foothold, doesn’t that indicate that new “competitors” are more expensive?

WREC was created as a not-for-profit cooperative because for-profit competitors weren’t interested in operating the poles and wires to deliver electricity to rural areas. Even though 60 years have passed, I can’t see that those economics have changed.

Nationwide, rural electric cooperatives average 7.4 members and collect $16,000 per mile of power line. That might seem like a great business opportunity until you compare it to other utilities. For-profit utilities average 34 customers and collect $75,500 per mile of power line. Municipal utilities average 48 customers and collect $113,000 per mile of power line.

Now, if you were a for-profit competitor, how much time would you spend looking for customers in Carlin where you would have about 15% as many potential customers or in South Fork with 14% as much potential revenue? I can see potential competitors looking for customers in Las Vegas. I can even see some slick marketing promising cheaper rates, but I can’t see potential competitors actually delivering a lower bill in West Wendover. If Question 3 passes, all I can see are higher bills no matter how far down the road I try to look.

Clay R. Fitch
Chief Executive Officer