CEO’s Message

Manager's Message

CEO’s Message — April 2021

Texas is a Mess
Headshot of Clay Fitch

“Don’t Mess with Texas” makes a great bumper sticker, but at the moment, Texas is just a mess. Sadly, this mess was predicted, but the only people who listened live in Nevada.

During the battle over ballot Question 3 in 2018, proponents held Texas up as a model of the future of electricity for Nevada. Those of us who opposed Question 3 believed Texas was a time bomb. To be fair, an open energy market like Texas can, and did, deliver competitive prices. Open markets also can, and did, deliver incredible price spikes and rolling blackouts. We didn’t know exactly when it would happen, but the bomb exploded in February when three severe winter storms swept across the Lone Star State.

Temperatures in Dallas, Austin, and San Antonio fell below temperatures in Anchorage, Alaska, triggering a series of compounding problems. First, to keep people warm, heating systems ran much longer than usual and activated emergency electric resistance heating coils. Some homes and businesses generally heated with natural gas also switched to electricity when natural gas supplies stopped flowing. Total electricity demand for the state was forecast at 58,000 megawatts (MW). Actual demand soared to 70,000 MW. I know MW doesn’t mean much to members who don’t deal with wholesale electricity daily. To put that spike in perspective, Wells Rural Electric Company’s (WREC’s) entire system— from Emigrant Pass west of Carlin to the middle of the Salt Flats east of Wendover—demands about 95 MW in the winter.

To make matters worse, not only did demand go through the roof, but supply fell through the floor when freezing temperatures locked up wind turbines and cloud cover limited solar generation. Shortages of natural gas also sidelined backup generation. Grid operators were left with no choice but to implement rolling blackouts to prevent the entire statewide grid from collapsing.

The law of supply and demand is as unforgiving as the laws of physics. For decades, WREC has purchased its wholesale power supply from the Bonneville Power Administration under long-term contracts. Those contracts typically increase a few percent in October of odd-numbered years but prevent dramatic price hikes. The current wholesale price under our BPA contracts is $35 per MW. Prices in Texas spiked to the legal limit of $9,000 per MW for certain hours across about 10 days.

Damage caused by the extreme cold weather quickly became a financial disaster. One consumer in Chambers County has filed a class-action lawsuit against his electricity provider because his average monthly bill of about $200 skyrocketed to $9,000.

Several electric utilities have declared bankruptcy, and more are likely to follow. Insurance companies are likely to take a big hit as well. One estimate pegs total damage at $195 billion. If that is accurate, these storms and their financial aftermath will be the most expensive disaster ever to hit Texas, surpassing the $125 billion in damage caused by Hurricane Harvey.

I have tremendous sympathy for consumers in Texas. They relied on the open market to provide affordable electricity. Unfortunately, there was no way for utilities to overcome decades of energy policy that hampered long-term investment in critical baseload generation.

Thankfully, voters in Nevada listened to utility experts, and our allies, and wisely voted no on Question 3.

Clay R. Fitch
Chief Executive Officer

Manager's Message

CEO’s Message — March 2021

Promises Kept
Headshot of Clay Fitch

When your board of directors and I announced plans to build a new operations center, we made three promises: The building would be finished on time, on budget, and would not drive a rate increase. It turned out to be a greater challenge than we expected, but we kept our promises.

COVID-19 struck in the middle of construction. Progress could have come to a screeching halt, but we had selected a dedicated and trustworthy general contractor who implemented COVID-19 safety protocols and guided the project through to completion. Cooperative Building Solutions kept its promise to finish the building, which enabled Wells Rural Electric Co. (WREC) to keep its promises to you.

Building new operations centerOur financial plan proved to be solid. Due to funds that had been diligently saved, savings from debt restructuring and budget reductions, and new financing at affordable rates, we were able to hold rates at 2017 levels. Despite an increase in wholesale power costs from the Bonneville Power Administration (BPA) in October 2019, WREC was able to keep its promise not to raise rates to pay for the new building.

That was no small feat. Wholesale power supply costs make up 72% of WREC’s total costs. Even a small increase in wholesale power supply rates has a dramatic impact on costs.

Because wholesale power supply makes up such a significant part of our costs, we devote a great deal of time working with other not-forprofit electric utilities and industry organizations to control those costs. We are grateful officials at BPA have listened to our concerns and worked to limit the 2019 increase.

Pie chart showing highest cost is from BPA power supplyBPA is working through its rate case for fiscal years 2022 and 2023. We continue to plead with BPA to hold rates steady, especially in light of current economic difficulties many of our members face.

We will not know until this summer what BPA’s rates will be, but we feel obligated to let you know we expect an increase. Given the enormous influence of wholesale power supply rates on costs, it seems unlikely WREC will be able to avoid a rate increase. If necessary, new rates will go into effect in October 2021.

We will provide additional information as it becomes available, including estimates for how increases in BPA’s rates will affect the rates you pay. As always, we are working to minimize the impact of any rate increase and ensure any increase is as fair as possible.

Clay R. Fitch
Chief Executive Officer

Manager's Message

CEO’s Message — February 2021

Committed to a Co-op Culture for All
Headshot of Clay Fitch

I’ve written many times about why and how Wells Rural Electric Co. (WREC) is different—because we’re a not-for-profit member-owned cooperative. Our business model sets us apart from other utilities because we adhere to seven guiding principles that reflect core values of democratic control, honesty, transparency, equity, inclusiveness, and service for the betterment of the community.

Electric cooperatives, including WREC, have a unique and storied place in our country’s history. We democratized the American dream by bringing electricity to rural areas when for-profit electric companies thought there wouldn’t be a big enough return on their investment.

Back then, cities were electrified, but rural areas were not, which created the original rural-urban divide. Newly established electric lines helped power economic opportunities in rural areas. Today, that spirit of equity and inclusion is a vital part of your cooperative’s DNA.

When our electric cooperative was founded, each member contributed an equal share to gain access to electricity that benefited individual families and the larger local community. Each member had an equal vote in cooperative matters. That sense of equity and inclusion is still how we operate today.

WREC was built by and belongs to the diverse communities and members we serve. Membership is open to everyone in our service territory regardless of race, religion, age, disability, gender or sexual identity, language, political perspective, or socioeconomic status. WREC is a stronger cooperative because we serve such distinct and vibrant communities.

By paying your electric bill each month, you’re a member of the cooperative—and every member has an equal voice and vote when it comes to cooperative governance. This ties back to our guiding principles of equitable economic participation and democratic control.

We encourage all members to vote in WREC’s director elections every year, and we invite all members to weigh in on discussions that set cooperative policies and priorities. We know our community members have different needs and perspectives. We welcome diverse views on all issues under consideration by your cooperative. The more viewpoints we hear, the better we can reflect the needs of all members of our community.

While our top priority is providing safe, reliable, clean, and affordable energy, we also want to be a catalyst for good in our community. We invest in our diverse communities through scholarship programs, charitable giving, educational programs, and more. We strive to make long-term decisions that improve and enrich the communities we serve.

While today’s world is radically different from when WREC was formed, our cooperative values have stood the test of time.

We recognize that today’s cooperative members expect more. My pledge to you—the members we proudly serve—is to promote a cooperative culture of member-focused inclusion, diversity, and equity for all.

Clay R. Fitch
Chief Executive Officer

Manager's Message

CEO’s Message — January 2021

Hope for the New Year
Headshot of Clay Fitch

As we welcomed the New Year, my thoughts were drawn back to this same time one year ago. There was hope and excitement for the opportunities ahead, yet we all know 2020 was not the year any of us expected. Who knew on March 13—Friday the 13th, to be exact—so many changes would happen in our communities? Life as we knew it began to look a lot different. Offices and schools closed, community meetings and activities were canceled, and we adapted to celebrating things like graduation in very different ways.

While many of these changes were difficult, there was still positivity around us. I witnessed the flexibility of our members and the dedication of your employees. Throughout the year, we adjusted where and how your employees served you. We had to complete work from a distance and had to adapt many of our service processes to maintain social distancing. Members had to adjust by communicating with their cooperative electronically.

We eagerly await the day when we can be together again for the events that make our communities such wonderful places to live. Serving our community is what makes us smile. Thank you to everyone for your understanding and flexibility.

We also got to witness our community step up in creative ways to support one another. When we learned of widespread layoffs, we immediately ramped up our efforts to help members receive financial assistance to stay warm and safe. Our member advocates worked miracles to help struggling members access existing assistance programs and new funding made available through the CARES Act. It reinforced my appreciation for our communities when members called and anonymously volunteered to help fellow members pay their bills. One of our financial partners, CoBank, also stepped up to help our members by providing a $10,000 matching grant.

I’m also grateful to the local service organizations and churches that participate in WREC’s Commitment to Community voucher program. Our combined efforts helped many members avoid disconnection and overwhelming account balances.

I’m optimistic that 2021 will be a brighter year, but I remain concerned about our friends and neighbors affected by the pandemic itself or by its financial aftermath. If you or another member you know are struggling with electricity bills that are usually higher in the winter, please contact your local office. We are eager to not only help you manage your account during these trying times, but we also have energy-efficiency and conservation programs that can help you reduce your energy consumption while enhancing the comfort of your home or business.

Best wishes for a safe and warm new year!

Clay R. Fitch
Chief Executive Officer

Manager's Message

CEO’s Message — December 2020

Capital Credit Checks on the Way

Headshot of Clay Fitch No matter how many times I’ve been disappointed by the contents of my mailbox, I still open it hoping to find something good inside. If your experience is similar to mine, most days it’s stuffed with bills or advertising—or both. If this sounds all too familiar, I’ve got good news for you!

In November and December, Wells Rural Electric Co. (WREC) will mail approximately 7,089 capital credit checks totaling $687,498. Depending on how long you have been a member—and how much electricity you used—you may find a check in your mailbox soon. Members with active accounts between 1989 and 2018 could receive a check before Christmas.

Electric cooperatives are the only electric utilities where every member is part-owner of the business. That makes us unlike any other form of electric utility. Municipal utilities and power districts are government entities, while stockholders own investor-owned utilities. Only electric cooperatives return margins—similar to profits—to the members who used electricity.

Since WREC is a member-owned electric cooperative, we work hard to serve our members by providing safe, reliable, affordable, and carbon-free electricity. Because members are owners, when revenues exceed the cost of doing business, those margins are returned to the members as capital credits.

Of course, just like any other business decision, there is a process for allocating and refunding capital credits:

  • An independent audit ensures costs and revenues are recorded accurately.
  • Margins are calculated by subtracting costs from revenues for the year.
  • Margins are prorated and assigned to each account according to the member’s total for the year.
  • Your board of directors determines that your cooperative has the financial strength to return capital credits.

To meet our financial obligations—such as long and short-term debt—replace aging infrastructure and build new power lines, to name just a few, the cooperative must retain capital for a period of time. The retention of capital helps us maintain the right balance between providing for the future and keeping rates low.

By holding onto margins before returning capital credits, WREC builds equity. This enables your cooperative to secure low-cost loans, which helps keep rates down, as we maintain and improve our power lines, substations, and facilities.

Returning capital credits is just one more way WREC is looking out for you. If you don’t receive a capital credit check by mid-December but believe you should have, please contact your local office.

Don’t forget to check your mailbox.

Clay R. Fitch
Chief Executive Officer

Manager's Message

CEO’s Message — November 2020

Looking Out for Our Members

Headshot of Clay FitchOutside my window, a poplar tree and a plum tree seem locked in a battle over which can produce the most intense color. The fire-orange poplar leaves are a sharp contrast to the almost black purple of the plum leaves, but both clearly show that we are making the transition from summer through fall to winter. All too soon, the colors will drift to the ground, and the work of fall cleanup will begin.

On the political front, the bright colors of the campaigns are quickly fading into the hard work of governing, and our sacred right to vote is transforming into the necessity of holding a representative government accountable.

I hope you voted no on Question 6, and it failed to become part of the Nevada Constitution. The outcome is not yet known as I write this column in October. As detailed in last month’s article, there were many good reasons to vote no.

Whether your electric cooperative will be subject to the provisions of an amendment to the Nevada Constitution or the law enacted through Nevada Senate Bill 358, your board and employees will still work hard to ensure your access to safe, reliable, affordable, and carbon-free electricity. There will be times, however, when we need your help.

I can only speculate on what legislation or regulation will emerge when the political dust settles, but bad ideas are like weeds—they just keep coming back.

The pressure to breach the Lower Snake River dams might intensify. There may be requirements to let more water spill over the dams rather than use it to generate electricity.

There are rumors of new taxes to plug holes in state and federal budgets. Given another year of catastrophic wildfire losses, we might see proposals for Red Flag Rules, which would require utilities to shut power off under certain weather and fire conditions.

We constantly have our ear to the ground for rumblings that indicate trouble is approaching. We will do our best to keep you informed about growing issues so if the need arises, you will be ready and able to demonstrate that Wells Rural Electric Co. is a grassroots organization that exists only to serve its members.

As communication preferences change, WREC is exploring the best ways to share information with you and activate a grassroots response. Information will most likely come from future editions of Ruralite magazine, our website, or through social media.

Calls to action will probably come through social media, emails, texts, or phone calls.

If ever you question whether a message you received is really from your rural electric cooperative, please contact your local office by calling one of our published telephone numbers.

Clay R. Fitch
Chief Executive Officer

Manager's Message

CEO’s Message — October 2020

No on Question 6

Headshot of Clay FitchPlease vote no on Question 6 when you cast your Nevada general election ballot.

Why? Question 6 suffers from many of the same flaws that plagued Question 3 two years ago:

  • Energy policy doesn’t belong in the Constitution.
  • It could take five or more years to make any changes to the amendment.
  • A restrictive mandate threatens reliability.
  • There is potential for higher costs for consumers.
  • Existing law already requires renewable energy.

Let’s examine these issues in detail.

First, Question 6 would amend the Nevada Constitution. The Constitution should guarantee the rights of the citizens and provide the basic framework of the government. Policy matters, such as the source of electricity, should be enacted through legislation where all points of view and real-world impacts can be considered.

Second, if problems develop as we begin to implement Question 6, it could take five years to make any changes. Anyone wanting to make a change would either have to gather enough signatures on a petition or get the legislature to put the proposal on the ballot.

It’s doubtful any problems will be discovered before the legislature adjourns next June, so it will probably have to wait until 2023. A change would then have to be approved by voters in 2024 and again in 2026 before it could take effect.

Third, Question 6 will require all “providers of electricity” to ensure 50% of the electricity they sell comes from renewable resources, but it doesn’t guarantee renewable resources will be available, or allow any room to maneuver if supplies fall short.

A similar mandate is creating considerable challenges in California, and spilling over into Nevada. Just a few weeks ago, extreme heat caused a massive demand for electricity. To avoid blackouts, regional grid operators begged Wells Rural Electric Co., and many other utilities, to reduce their need for electricity.

We passed that request on to you. Through your efforts, and those of other consumers across the West, a crisis was avoided. Question 6 could make that unusual event much more frequent.

Fourth, just as surely as night follows day, higher demand will eventually lead to higher prices.

Lastly, Question 6 is unnecessary. Senate Bill 358 of the 2019 Nevada Legislature already requires utilities to provide renewable energy. In contrast to the rigid mandate of Question 6, Senate Bill 358 allows utilities to adjust to changing conditions.

By participating in the legislative process, WREC demonstrated support for renewable energy but persuaded lawmakers to include protections for cooperative consumers like you. Those protections, and the ability of the legislature to make additional changes if needed, allowed WREC to support the bill.

WREC is committed to providing safe, reliable, affordable, and carbon-free electricity. Your board of directors made that decision decades ago. Question 6 would limit our ability to meet your changing needs.

Clay R. Fitch
Chief Executive Officer

Manager's Message

CEO’s Message — August 2020

Respecting Each Other

Headshot of Clay FitchI have had many conversations recently with community members, employees, and your Board of Directors. The conversations centered around our communities, as well as the country and the world. Clearly, there are differing opinions on what a public organization such as Wells Rural Electric Co.’s responsibility is during such challenging times.

As the executive responsible for this organization and its people, I want to restate our core organizational values and beliefs, as well as our philosophy and mission. These are our guideposts. I feel fortunate the Board of Directors had the vision to establish principles that have guided your cooperative for decades. There have been minor revisions to prepare for changing circumstances, but I believe these principles have remained relevant and appropriate for the times.

Philosophy/Mission

Our mission: Wells Rural Electric Co. improves the quality of life of the communities we serve by meeting the changing needs of our members through the guiding principles of our locally controlled cooperative.

Our philosophy: We value our public power traditions, while seeking new and better ways to preserve the benefits of that heritage. We believe that with innovation, teamwork, and commitment, we can compete effectively in a changing environment.

Core Values and Beliefs

Safety: Working safely and protecting our members, your employees and your infrastructure is not negotiable. The “Commitment to Zero” program enhanced our efforts to eliminate accidents and injuries by integrating a nationally recognized safety program.

Integrity: Being ethical and holding ourselves accountable to conduct business in a fair, honest, transparent, compliant, and environmentally responsible manner is at the core of what we do.

Member service: Providing quality service at a competitive price while being responsible to our members’ needs creates added value and improves member satisfaction.

Respect: Encouraging constructive dialogue that promotes a culture of inclusiveness, recognizes our differences, and accepts varying viewpoints will lead us to optimal solutions for even the most difficult challenges.

Operational excellence: Engaging employees to strive for excellence and continuous improvement ensures we provide reliable service while managing costs and creating a rewarding work environment.

Sustainability: Maintaining financial integrity, minimizing our environmental impact, and supporting responsible economic development in our communities ensures the long-term viability of the organization and the communities we serve.

Part of my commitment to the organization and our members is to continue to listen and to learn. I will do so while ensuring the safe and reliable provision of electric service for you.

Clay R. Fitch
Chief Executive Officer

Manager's Message

CEO’s Message — July 2020

I’m Proud of Our Community’s Response to a Crisis

Headshot of Clay FitchI know COVID-19 has occupied our time and thoughts for the past few months, and I suspect we have a way to go before this is behind us. Recently, I’ve heard members talking about the “new normal.” It makes me wonder what that means for us as individuals, our families, our friends, our businesses, and our communities.

I’ve been overwhelmed by the generosity of our members to each other. We’ve had several members contact us about paying the bill for another member they know is struggling. We know of local businesses that continued to pay their employees even after they were ordered to close their doors. If the “new normal” means having more understanding and empathy for our fellow members, at least one good thing will have come from this pandemic.

I express my heartfelt gratitude to our employees for their dedicated service and to you, our members, for your patience and flexibility during this challenging time. The COVID-19 pandemic has required us to change how we do things, but our commitment to serving you safely, affordably, and reliably remains unwavering. In addition to being dedicated to your service, your employees have also made generous donations to help members during this challenging time.

More than a decade ago, your Board of Directors made the decision to partner with local service organizations, welfare agencies, senior centers, family resource centers, and churches to provide Commitment to Community vouchers for electricity to assist members who have encountered unexpected financial hardships.

While this program has always been important, it has been invaluable as WREC members have endured unprecedented unemployment. One of WREC’s vendors, CoBank, also provided a grant to help members through this difficult time.

If you, or someone you know, is falling behind, I hope you will contact your local WREC office. Our Member Advocates can help in ways we have never been able to before. Not only can these specially trained employees help you determine if you are eligible for one of the temporary assistance programs, but they can also help you apply for state and federal aid programs. Some of these programs have received supplemental funding and have adjusted their criteria to address the unique circumstances created by the economic impacts of COVID-19. Even if you haven’t been eligible in the past, you may be eligible now.

While no one can ever fully prepare for a crisis like we are experiencing, I am proud of our employees, ever resourceful and resilient, and I am grateful for your patience and understanding. Throughout our membership, people are rising to the occasion. We join so many others in looking forward to a brighter future filled with health, safety, prosperity, and peace.

Clay R. Fitch
Chief Executive Officer

Manager's Message

CEO’s Message — June 2020

Nominations for Board of Directors to Open

Headshot of Clay FitchNominations for four seats on the Wells Rural Electric Co. Board of Directors open Monday, June 8. Director seats subject to election are held by incumbents Gerald (Jerry) Anderson, Lois Nannini, Bruce Widmer, and Kirk Dahl.

Nominations must be made on the 2020 Board of Directors Election Nomination Form available at all WREC offices and our website. All mandatory questions must be answered for the nomination to be valid.

Completed nomination forms must be received by Lauren Landa, general counsel, by 5:00 p.m. Pacific Time Monday, June 22. Mail the completed form to Lauren Landa, 530 Idaho St., Elko, NV 89801, or P.O. Box 1358, Elko, NV 89803; email; or fax to (775) 738-4220. 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 as of June 22, 2020, may nominate another eligible member, himself or herself, using the approved form. The nomination form 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, nonincumbent nominees must attend a mandatory informational workshop held electronically and/or telephonically on Tuesday, June 30, at 1 p.m. Pacific Time.

Nominees must not have any felony convictions within seven years prior to June 8, 2020. The nominee must be of legal voting age prior to June 8, 2020.

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 that is outstanding for more than 90 days. The nominee, or his/her entity, must not have an account written-off as a bad debt by WREC within seven years prior to June 8, 2020.

The nominee must not be a current employee of WREC or a former employee of WREC within five years prior to June 22, 2020.

The nominee, or his/her entity, must not have been the subject of a Ruralite feature story since February 19, 2020.

Additional voluntary information, including years of WREC membership, occupation, and years on WREC board may be included. Education and training credentials—not more than 300 characters and spaces—may also be included. WREC reserves the right to edit.

The nomination should 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