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