CEO’s Message

Manager's Message

CEO Message – April 2018

Robert Fulghum is probably best known for his book, “All I Really Need 
to Know I Learned In Kindergarten.” More than 30 years since its first publication, I think that message still resonates with people.

We all recognize that there are some fundamental principles that serve us well regardless of changing circumstances. Fulghum’s list included: “Play fair. Share everything. Wash your hands before you eat. Clean up your own mess.”

If I were to write a similar book from the rural electric cooperative perspective, my list of fundamental principles would begin with, “Local control.”

I suspect that local control resonates with you as well. In our own lives, our families, our communities and even our state, we want to be able to make decisions in our own best interest. Wells Rural Electric Company (WREC) honors that principle with annual elections for members of the Board of Directors. WREC has used the resonating message of local control many times to protect your interests in the Legislature and even in Congress.

My list of fundamental principles would also include: “Ask members what they want.”

In light of these principles, I find Question 3, also known as the Energy Choice Initiative (ECI) to be fundamentally flawed.

First and foremost, the proponents of ECI never asked you, our members, if you wanted to be included. The amendment to the Nevada Constitution that they proposed doesn’t recognize that WREC exists because members chose to create a cooperative. Competition often leads to lower prices, but the most effective way to bring safe, reliable and affordable electricity to rural Nevada is through an electric cooperative.

“Restructuring” or “deregulating” the electric utility industry isn’t a new concept. Multiple states have enacted similar laws. Even Nevada started down that road in the early 1990s. However, every other state recognized the importance of local control. Their laws allowed individual cooperatives to “opt in” if retail competition was good for their members. Despite “choice” being part of the title, the Energy Choice Initiative eliminates that choice for you.

Second, no state has ever attempted to implement restructuring through a constitutional amendment. I understand why the proponents of ECI chose to bypass the legislative process. It’s slow, difficult and rarely can you get everything you want. However, as Winston Churchill so wisely observed, “Democracy is the worst form of government except for all those others that have been tried from time to time.”

The legislative process is slow because there are so many consequences to be considered. It’s difficult because there are competing interests. It’s rare to get everything you want because it probably comes at the expense of someone else. Yet that deliberative process usually yields a compromise we can accept.

The backers of ECI made another fundamental error by ignoring the fact that four of the 11 utilities that serve Nevada’s consumers are based in neighboring states. Additionally, three utilities based in Nevada serve into other states.

Lastly, ECI has a fundamentally flawed time frame. All of the laws necessary to preserve reliability, protect consumers, create wholesale and retail markets, recruit providers, enable consumers to comparison shop and deploy a standardized billing system must be written by the Legislature by 2023.

There are too many fundamental flaws for the Energy Choice Initiative to become part of Nevada’s Constitution.

Clay R. Fitch,
Chief Executive Officer

Manager's Message

CEO Message – March 2018

Estimates vary, but there are approximately 175,000 words currently in use in the English language. That number all but guarantees that some words will have very similar meanings. Yet the existence of two words, regardless of similarities, suggests that there is a difference.

Consider two very common words: “simple” and “easy.” These words are often used interchangeably, but I’m going to suggest that “simple” means that the steps to complete a task can be clearly defined. In contrast, “easy” describes the amount of effort required to complete those simple steps.

For example, it is simple to lose weight. In fact, there are only two options. In the words of a former Board member, the late Dr. S. J. Smith, “You can starve it off or burn it off.” Every weight loss plan on the market is only a variation of eating less or exercising more, or some combination of the two.

Even though losing weight is simple, it’s anything but easy. The National Institutes of Health estimate that more than one in three Americans are overweight. An article in U. S. News reported that Americans spend more than $60 billion annually on everything from gym memberships to weight-loss programs to shed pounds.

What your electric cooperative does for you every day is also simple. Wells Rural Electric Company (WREC) delivers safe, reliable, affordable and abundant electricity. While your cooperative and its employees do a great many other things for the communities WREC serves, the only reason WREC exists, indeed the reason it was created, was to do that one simple thing: deliver electricity.

While delivering electricity is simple, it has never been easy. It took a grassroots movement of neighbors working together to create a new company focused on connecting its members to the grid. That movement also needed a federal loan program, the Rural Electrification Administration, because neither investors or commercial banks would lend money to a start-up, not-for-profit cooperative, run by amateurs in a small, isolated market.

Over the last sixty years, your electric cooperative has changed in many ways to meet your growing demand for electricity. It has maximized technology, controlled costs and increased convenience, but some things haven’t changed. Even though WREC has grown from 296 members in 1960 to 4,055 members today, we are a very small niche compared to other markets. The transmission power lines early members paid to build are the same ones connecting Carlin, Wendover, West Wendover, Wells and rural areas to the grid today. Most importantly, the rural electric cooperative you use every day is still the most effective, efficient and affordable way for you to purchase electricity and have it delivered because its run by a group of your friends and neighbors you elect to make choices for your cooperative.

During the next several months, there will be a growing debate about the Energy Choice Initiative (ECI). Through this magazine and other media channels, we will providing more information not only about what ECI is, but also what it isn’t. Please ask questions and engage in the discussion.

Clay R. Fitch
Chief Executive Officer

Manager's Message

CEO Message – February 2018

Most cultures have a creation story: The Raven, Zeus, Adam and Eve, or the Big Bang Theory, to name just a few. What these stories have in common is that they describe the earliest beginnings of the present world. More importantly, a creation story contains enduring truths that guide one generation after another.

Wells Rural Electric Company has a creation story of its own. Borrowing from a well-known creation story, “In the beginning”…a couple of ranchers in Clover Valley saw the growing benefits of electricity every time they went to town. A few ranchers had “light plants,” but those primitive generators had very limited capacity and were noisy, unreliable and expensive. They asked Harry Cazier, who had founded and owned Wells Power Company, to build a power line into Clover Valley.

Cazier understood their predicament, but told them that he was too old and didn’t have enough money for such a project. He recommended they apply for a loan from the Rural Electrification Administration (REA). If they were successful, he offered to sell them Wells Power Company to provide a base on which to build.

Word spread about the effort to bring central station electricity to Clover Valley. Ranchers from Ruby Valley, Starr Valley, Metropolis and Contact soon joined.

The founding members celebrated when the REA loan was approved May 14, 1958.

The next step was replacing aging and inadequate diesel generators with safe, clean, abundant, reliable hydroelectricity by building a transmission line from Idaho to Wells. That contract was signed May 27, 1958.

The cooperative business model created immediate benefits. Retail rates for commercial members in Wells were reduced by 8%, while residential rates were reduced by 20%.

During World War II, Wendover was powered by generators at Wendover Air Base, The StateLine Hotel and Casino, Peterson’s Market and the Western Service Station. Each generator was connected a handful of neighbors.

In 1947, Clarence McLeod, who owned Western Service Station, led a small group of investors in forming Wendover Power Company. By 1958, the generators that had originally served the Wendover Air Base were wearing out and the community needed more electricity. McLeod offered to sell Wendover Power Company to WREC. The Board of Directors voted to extend service to Wendover and the sale was completed in 1962.

WREC built a transmission line from Wells to Wendover, and connected Oasis and a few ranches along the way.

Carlin had been relying on the generator taken from the Metropolis Hotel in 1922 and on generators the railroad also connected to a few homes and business. The City of Carlin eventually operated their own generators. When Carlin outgrew those generators and the cost of fuel skyrocketed in the 1970’s, WREC extended service to Carlin. Again, the cooperative business model, and a connection to the hydroelectric dams, reduced rates 10%.

The are several enduring truths from our creation story that continue to guide WREC to this day. First, WREC was created by, and for, its members. Second, WREC is democratically controlled. Third, WREC has created a way to serve every load, regardless of the size. Fourth, the not-for-profit cooperative business model always provides affordable electricity. Lastly, by working together, we can overcome any challenge. We have always been, and always will be, more powerful together.

Clay R. Fitch,
Chief Executive Officer 

Manager's Message

CEO Message – January 2018

“Spend less, save more,” “Get organized,” “Stay fit and healthy,” “Help others with their dreams,” and “Spend more time with family,” are consistently among the top New Year’s resolutions. In the spirit of this tradition, I would like to share Wells Rural Electric Company’s version of these familiar resolutions.

  • Spend less, save more. Use WREC’s smarthub app to help you better understand your electricity use. Knowing when you use energy can help you isolate which devices or activities are consuming the most electricity. Once you know where you are using electricity, you can decide if purchasing more efficient devices is the best way to save, or if you can reduce how much you use that device. Save money by upgrading windows, insulation and appliances. Check WREC’s energy-efficiency program before making a purchase to ensure that your plans qualify for a rebate to offset some of the costs.
  • Get organized. WREC will continue to advocate for our system of hydroelectric dams that provide abundant, carbon-free, renew- able energy. Three federal agencies are preparing an Environmental Impact Statement on the Columbia River system operations. If ever there was a two-edged sword, the EIS is it. On one side, a thorough and defensible EIS could end decades of expensive litigation. On the other, the EIS could find that removing three dams on the lower Snake River and other radical salmon restoration concepts is warranted. WREC has been participating in the development of the EIS and will continue to work with our trade associations, the federal agencies and our Congressional delegation to ensure the final decision cuts your way.
  • Staying fit and healthy. WREC’s goals are to maintain decades of financial integrity and control costs. While inflation rose about 2.2% during 2017, WREC’s costs for operating the distribution system rose less than 0.5%. WREC was also part of a larger coalition that persuaded Bonneville Power Administration to minimize its wholesale power supply rate increase.
  • Help others with their dreams. Through your generosity, the Next Dollar Foundation invests in lasting projects in every community WREC serves and offers education grants to adults who are continuing their education. Applications for project funding are always available, while education grant applications will be available in February. If you aren’t already making a small contribution by rounding up your monthly power bill, please make joining the Next Dollar Foundation one of your New Year’s resolutions. Visit www.wrec.coop to sign up or contact your local office.
  • Spend more time with family. In 2018, WREC will celebrate 60 years of providing safe, reliable and affordable electricity. We think of our members as family and look forward to spending more time with you as we mark this milestone and make a renewed effort to provide the best possible service and accurate information about your cooperative.

Over the next several months, it will be absolutely critical for you understand the potential impacts of the proposed Energy Choice Initiative. Never in the history of your cooperative have we faced a greater challenge, or opportunity, depending on which rules are finally adopted.

The issues surrounding ECI change on a daily basis so your Board and management have not yet taken a position on this ballot question. Please resolve to study the ECI issue as it unfolds so that you can make the best decision in the November election.

 

Clay R. Fitch,
Chief Executive Officer

Manager's Message

CEO Message – December 2017

“Pay yourself first.” Almost every personal financial guide includes this advice. Techniques vary, but the general principle is that investing in your future should take priority over other expenses. It’s easy to say, but paying yourself first takes planning, discipline and consistency.

In this column, I often refer to Wells Rural Electric Company as “your electric cooperative.” I do not use that description lightly. As members of a cooperative that purchases and delivers safe, reliable and affordable electricity on your behalf, you are actually an owner. You aren’t buying stocks or bonds, but with every bill you pay, you invest in your future.

Those investments take several forms.

First, WREC invests in member education. We believe it is critically important that you understand how your cooperative is different from the typical utility, how it operates and how it provides a return on your investment through rates that are among the lowest in the State.

Second, your investments result in an extraordinary level of reliability. Your electricity is on 99.99% of the time. WREC constantly upgrades and maintains the substations and power lines that deliver electricity to your homes and businesses. Every year, our dedicated line crews complete numerous projects to ensure your electricity is always on. Ensuring reliability begins with a disciplined analysis of outage data, line patrol results and an evaluation of changing electricity usage patterns. Improvements are designed to capture the maximum impact from your investment. Projects include replacing aging equipment, upgrading power lines and adding new equipment to keep electricity for all of your needs flowing around the clock, every day of the year.

This year, projects included replacing 60-year-old poles in Ruby Valley, improving voltage regulation in Clover Valley, replacing meters in West Wendover and Wendover, Utah, replacing substation meters in Carlin, upgrading wire in Starr Valley, replacing underground power lines in South Fork, and trimming trees and enhancing wildlife protection throughout our entire service territory.

You are also investing in long-term contracts for the most affordable wholesale electricity supply available. WREC has long been the beneficiary of an enduring investment in a relationship with Bonneville Power Administration that provides clean, renewable 95.4% carbon-free electricity. WREC has also invested in the creation of Northwest Energy Services Cooperative to take advantage of changing wholesale electricity markets.

Finally, WREC invests in building relationships with local, state, regional and national elected officials and regulatory authorities who make decisions that affect costs and reliability. WREC works to ensure that new rules and regulations recognize the unique character of your cooperative and preserve local control through your elected Board of Directors.

As the year draws to a close, I am pleased to report that your investment in your cooperative is secure, effectively-governed, well-managed and positioned to provide a return on your investment for years to come.

Clay R. Fitch
Chief Executive Officer

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