Report from WOEC Monthly Meeting

I attended the WOEC board meeting Tuesday, August 20, 2013. Several items are, in my opinion, noteworthy.

You may have heard that the newest director, Robert France unexpectedly did not show up to the annual meeting. The reason is that he had died suddenly on the Thursday before  the annual meeting of complications from diabetes. The other candidate for the position, Larry Averitt of Cason Road near Banks was appointed as the new District 7 director at the Tuesday board meeting.

Leigh Taylor of CoBank, a cooperative bank, gave a presentation to the board. WOEC already has a line of credit with another cooperative bank, the National Rural Utilities Cooperative Finance Corporation (CFC), but CoBank has some additional advantages.  It appeared that it might be beneficial to WOEC to be members of both cooperatives. The board voted to join CoBank and agreed to pay the $1,000 membership fee. Now, it might seem like a bad idea for financially strapped WOEC to spend $1,000 to join another co-op, but consider:

• Several programs exist to help financially strapped people to pay utility bills. WOEC contributes $5,000 each to Oregon Heat and Care to Share. In addition, WOEC employees and members also donate to these organizations. CoBank will match WOEC’s $5,000 donation to one of those organizations. What makes this all worthwhile is that WOEC is forced to write off at least $4,000 per month in bad debt. So every little bit helps.

The WOEC web site has been hacked. As a countermeasure, the web site has been “frozen” so that there is no danger of passing malicious code to those members logging in. As a result, the information on the site is dated and static. A changeover to a new, more interactive web site has been in planning, and now those efforts will be accelerated, however it will take some time to implement.

The big discussion of the evening, taking almost two hours concerned the upcoming 12 to 15 percent rate increase. WOEC is required to have a cash reserve, but four FEMA events in five years have depleted that reserve. It costs less to pay for storm damage out of pocket than to borrow and pay back the loan with the additional interest. If damage to the system costs a million dollars, the interest is a significant dollar amount. We currently are paying for loans stretching back thirty years. WOEC has had to borrow heavily to repair damage to the system in the past and to upgrade to prevent future damage. So, with the goals of rebuilding the reserve, paying down debt, maintaining the system, offering good service, and not changing the rates again for at least two years, how should the rate be structured?

The current fixed cost to run WOEC is approximately $67 per meter. That cost is down from $108 in the past. The ideal situation would be to charge each account the fixed cost of $67 plus the usage of (X) cents per kilowatt hour (kwh) to cover the cost of the electricity. Nobody in the electric business does that. The problem is that having a high meter charge and a low usage charge hurts the people who use a small amount of electricity and benefits those who use a lot. Conversely, having a low meter charge and a higher usage charge has the opposite effect. A balance between the two is necessary.

After much discussion, staff was asked to prepare several scenarios with slightly higher meter fees and a two-tiered rate breaking somewhere around 1,000 kwh of usage. Staff was further directed to provide current usage data in order for the board to determine the most equitable way to implement the rate change. The rate structure will be discussed at the September board meeting.

Disappointment was expressed by staff and board members that representatives from the group “Power of One” were not present at the meeting for that discussion.

I was the only lay member at the meeting and felt obligated to let the community know what went on. I have left out some details such as the financial report and the Operations Manager’s report, details of which I can’t remember. I did not take notes. I did not write this as a reporter. I wrote it as a member who has watched WOEC closely for over 45 years.