The INDEPENDENT, June 20, 2012
Page 13
Power of the People
By W. Marc Farmer, General Manager,
West Oregon Electric Cooperative
Setting the Record
Straight
A comment in Letters to the
Editor in the June 6 issue of The
INDEPENDENT is providing me
with another opportunity to com-
municate with our members
once again about the new build-
ing costs, the reason for the building, and the reality of
the rates at WOEC. I welcome the chance to further
educate and discuss the Co-op and the reasons for
various aspects of our member-owned electric utility.
As a reminder, the Co-op had to relocate our head-
quarters by order of FEMA (Federal Emergency Man-
agement Agency). We had no choice in the matter and
were given three years to relocate our facilities. The
edict was due to the fact that, as an essential service
being over 80% damaged as a result of the last flood,
we had to relocate or lose future funding if flooded
again. The message was clear, not only from FEMA
but common sense, that after being flooded twice
within 11 years we needed to get our offices out of the
flood plain. It’s the same reason and logic others in
the community have used in raising their homes, the
schools being relocated, and others homes and busi-
nesses relocating.
As far as the costs of the new building, we were
able to provide a facility that looks good, is sufficient
in size for current and future needs, is conveniently lo-
cated, and is out of the flood plain, for a monthly cost
to our Co-op members of only $3. Our member survey
said that 81% of our members would support a new
building if we were able to keep it at or below $3 per
month, which we did due to some very smart and in-
novative decisions in the construction. You can’t even
buy a pack of cigarettes or a latté for that much. The
cost is spread over 30 years, so both current and fu-
ture members will share in the cost of the facility that
was constructed to last over 50 years. So we not only
did what we needed to do, but did it at a very reason-
able and fair price.
The new building is not why the rates at WOEC are
higher than our neighbors. There are several factors
involved in our rates and I will briefly explain each.
The major and unavoidable fact and reality of WOEC
is our service territory. It is by far the toughest and
most expensive system to maintain and operate in the
state of Oregon. The Co-op was created over 68
years ago because nobody else wanted to serve the
area, and we exist today because, 68 years later, still
nobody wants to serve our territory. Our service area
covers parts of five counties and is spread over 1,224
square miles of rugged terrain containing over 2 mil-
lion trees with 4,300 meters sprinkled among them.
We have an unbalanced, low-density load, which
means we have little to no industrial load, a small per-
centage of commercial load and heavy residential
load, all spread across those 1,224 square miles. For-
est Grove, by comparison, is a well balanced, high
density load all contained within a five mile service
area with few trees and little travel time to service.
The second factor is that for 33 years this Co-op
had the lowest prices in the state, because no money
was being put back into the system. Maintenance, up-
keep, and upgrading were not being done. David
Seuss, Russell Green and I then inherited a system
that was aging, declining in value, unreliable, and in
danger of being shut down for safety hazards caused
by trees in the lines. The last three General Managers
have had to take drastic measures to bring the system
into compliance and invest dollars and time into up-
grading the system. It would have been much cheap-
er to do all of this at yesterday’s dollars and along the
way, rather than doing a major consolidated push at
today’s dollars. The choice I had as Manager was to
either bury my head in the sand and ignore the facts
as Managers did during those 33 years, or make the
tough decisions that had to be made and fix the prob-
lem. I chose the latter and have upgraded the system
from one end to the other, with one substation trans-
former left to replace on 2014, in my ten year plan,
and we will be done ahead of schedule. I have also
brought in a second tree trimming crew to decrease
the tree hazards and safety violations, have a ten year
cycle plan in place to inspect, treat, and replace pow-
er poles to extend their useful life, moved the head-
quarters and main Vernonia substation out of the flood
plain, and undergrounded the Elsie/Timber transmis-
sion line. All of these projects have resulted in greater
reliability and longevity of our system, reduced main-
tenance, outages, and repair costs, and created a
safer system. While there were obviously up-front
costs to do so, the savings will pay off in the long run.
The third major factor is increases in both our
wholesale power costs and the costs of goods and
services we use. Just as our members experience
higher costs in everything from other utilities, fuel,
goods and services, so do we, and those costs have
to be included in our rates. We have and will continue
to see dramatic increases in our wholesale power
rates going forward which we simply have to pass
through. We have no control over these costs and cer-
tainly don’t want them, either. BPA sets the rates we
are charged for the power we provide and we are at
their mercy.
The only ways we could see rate relief at WOEC
would be if we were to experience significant load
growth, with a more balanced load, or a significant re-
duction in our costs of power, goods and services, or
that our system was merged with another utility. None
of these are likely to occur. Land use laws, our loca-
tion off the beaten path, and the economy are working
against any major growth occurring, costs are more
likely to increase not decrease, and as I stated before,
nobody else wants to service this area because it is so
difficult and expensive to serve and maintain with little
revenue to cover the costs. It is the nature of the
beast, unfortunately.
It is the reality of our situation that keeps me awake
at night, that there is little to nothing I can do to give
rate relief to the members of WOEC, I have little o no
control over the vast majority of our costs. Of those I
can influence, we keep as low as possible. It is very
frustrating to me, as General Manager, because I am
fully aware and understand the impact our rates have
on our members. Many of you are my friends, neigh-
bors, and family, and I know the effects the economy
is having on the members. We provide energy tips
and programs to help our members use energy more
efficiently to lower costs, the management team took
a two-year wage freeze and union employees a one-
year. We have kept our costs and rates as low as we
can, and in some cases lower than we should, but
made the conscious choice to do so, which will have
to be addressed at some point in the future. I was told
when I came here seven years ago that this was the
toughest and most challenging Co-op management
job in the entire state; it has and does live up to its rep-
utation.
I understand that our rates have a negative impact
on those who are here and the decision of others look-
ing at relocating here. The reality I deal with is that
there is nothing I can do to change the situation now
or in the future. If there was, I would have done so al-
ready. Despite the reality I am faced with, I am con-
stantly looking for possible solutions and will continue
to do so. Let’s hope for a major change in our econo-
my and future load growth in our service area. We
could all use it.
Out of My Mind…
From page 2
lion with ads opposing the
measure, some of which were
outright lies, it was defeated by
less than one percent of the
vote.
Would Oregonians fall for
the big money tactics? Yes.
A few years ago, Oregon
voters faced a ballot measure
increasing the cigarette tax to
help fund smoking cessation
and low income health care. A
majority of people supported
the measure until they were
bombarded by a few months of
tobacco industry ads. One ad
bemoaned the economic pain
that low income smokers would
feel, another decried how un-
fairly smokers were being treat-
ed. Oh yes, the tobacco indus-
try showed how it really cares
about the poor and the un-
healthy.
The measure was defeated,
and the only industry in Ameri-
ca that is legally allowed to sell
poison for human consumption
is still thriving.
Some extremely wealthy
people won’t rely entirely on
the various secret donor organ-
izations, and will be public
about at least some their politi-
cal spending. Las Vegas casi-
no mogul Sheldon Adelson is a
good example. He has already
spent $35 million, first to pro-
mote Newt Gingrich, now Mitt
Romney, and says he is ready
to spend “at least” $100 million.
Adelson is upset about Oba-
ma’s Wall Street regulations,
which are so tough that he has
already made more than $21
billion under Obama.
These examples are only a
whiff of the foul winds that will
be blowing through our nation
this year. The stench promises
to be truly overwhelming.
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