Bob Perry has been the General Manager at West Oregon Electric Cooperative (WOEC) since January. Vernonia’s Voice sat down to visit with him, find out about his background and ask him a few questions about his view on the operations at WOEC.
Perry is an intelligent and thoughtful man who takes his time and answers questions in a very deliberate manner. He is extremely knowledgeable about the electric utility industry in general and especially about cooperatives. He appears to approach his job with a customer service mentality and is very community minded. He is approachable and easy to talk to, with a dry sense of humor and a no-nonsense attitude. He says his personal motto, which is etched in stone on his desk (on the back of his name plate, facing him) is “Non Sibi, Seb Aliis,” Not for Themselves, But for Others.
Perry and wife Linda are purchasing a home in Vernonia with a yard for Megan, their Labrador retriever. Together Bob and Linda enjoy riding motorcycles and kayaking. Linda likes to quilt and garden; Bob says he enjoys shooting sports, fishing and amateur radio. Bob, who is of Scottish decent, also owns and plays a set of bagpipes. Perry says he will become a member of the Lions Club and would like to be an active member of the Chamber of Commerce.
The question on everyone’s minds about the new General Manager is, of course, “Can you lower our electric rates?” Perry’s answer, though probably not what the members want to hear, was a simple, no.
“You have a certain revenue requirement to pay your bills,” explained Perry. “That is just a fact of life. The economics of this co-op are not going to change. It’s not that we can lower rates. I think looking forward we could stabilize rates.”
Perry is originally from Connecticut, and has lived and worked all over the country, spending time in Pennsylvania, Colorado, Indiana, New York and Kansas, before arriving here in Vernonia.
Perry says he was working in the automotive industry in Indiana as an electrician, fixing robotics equipment, when a friend recruited him to come work at a local co-op, working in Member Services. That job was actually working with members to install switches on water heaters to manage the load on the overall system. “As I learned what a co-op was and how they plugged into the community, I really enjoyed the philosophy of the electric co-op,” says Perry. He says he got involved in 4-H electric and working with kids in schools and with First Responders on safety programs. “We were part of these activities and they continued to grow the longer I was with the co-op.”
At the age of 42, Perry took advantage of a tuition reimbursement program for employees, and entered college for the first time, earning a Bachelor’s Degree in Business from Kelly School of Business in under eight years while continuing to work. He went on and paid for his own Master’s Degree in Management from Indiana Wesleyan University.
Perry found there was no place for him to advance within the co-op. When he was offered, he took the General Manager position in up-state New York with a rural co-op. He was there for three years before being offered a position in Kansas with another rural co-op. He was there for a little over a year before being offered the job with WOEC.
Perry says he was impressed when he arrived in Vernonia for his first visit and interview. “As I was coming up Highway 47 I was wishing I had my motorcycle because it was such a pretty day. I had no idea what Vernonia looked like. As I came in and saw the co-op building, it really set the stage for my impression of Vernonia. I drove through downtown and looked at the businesses. I called my wife and told her I was here and said she would really like the town – it’s very quaint and looks like a thriving and healthy community. And my first impression driving past the WOEC building, when I drove in was a very positive experience for an outsider. I don’t know if the locals feel that way, but that was my first experience. I know I’m proud to be here.”
Perry added that he was excited and interested to see how the buildings that will be part of the Rose Avenue Project, located next door to the WOEC headquarters, will add to the attractiveness of Vernonia and promote a welcoming atmosphere, including the Vernonia Health Center, which broke ground March 28.
Perry says the co-op in New York was similar to WOEC, with a comparable landscape and the same issues WOEC has with trees interfering with transmission lines, along with a low density member base. The co-op in Kansas was farm based, with almost no trees, but also had large distances between customers.
According to Perry, both previous co-ops he managed had a density rate of about three customers per mile of line. In contrast, WOEC has a density of about six customers per mile. But, Perry say, WOEC’s numbers are inflated by Vernonia’s population; remove Vernonia from the equation and WOEC has about three members per mile. “When you have higher density you still have roughly eighteen poles per mile of line and it cost us the same to put a mile of line up as any other co-op,” says Perry. “The higher the density you have, the better for spreading those fixed costs over more meters. In low density systems like out in Nebraska and Wyoming, where they have less than two members per mile, the costs go up significantly.” Perry went on to say that the co-op in Kansas had higher rates than WOEC.
Perry also expanded on the problems trees present for an electric co-op. “New York had trees, a lot of them and the same problems we associate with trees here. The blessed curse. They’re beautiful to look at. Everybody loves them and we all want them. But they do cause higher maintenance costs. That’s just the nature of the beast. Right-of-way maintenance is probably our number one concern.”
So what about the high rates here at WOEC? Perry says that hydro power is the least expensive type of power available anywhere. It’s the cost to maintain the system that drives costs up at WOEC. Perry explained that a report is generated by the Energy Information Agency (EIA) which compiles the rates of all the utilities throughout the United States. According to Perry, the latest report shows that, out of 3,000 utilities nationwide WOEC has the 532nd highest rates, with a rate of 13.8 cents per kilowatt hour. Perry went on to explain that the spread between to the top and the bottom is about 3.5 cents. “So it’s really splitting hairs. The average cost per kilowatt hour is about 14 cents.”
Perry went on to explain that any utility system, like Clatskanie PUD, with a lot of industry or heavy commercial customers, will help subsidize residential rates. “The flip side of that is that when you have 90 to 95 percent of your system residential, especially with low density, you have high costs associated, like at WOEC.”
Perry reiterated what WOEC members have been told in the past; the system has been hit hard during recent years by natural disasters. When a weather event is declared a FEMA emergency in a county, FEMA will pay up to 85% of repair costs; the utility has to pay the rest. Because WOEC operates in several counties, not all damages have been part of federal declarations and were therefore not covered by FEMA. In addition Perry says, WOEC had to relocate their headquarters and substations in Vernonia. “You’re not going to get 100% [of damages], no co-op is,” explains Perry. “So you have this expense that has to be distributed among the members. Are those bills going to go away? No.”
Although he says he can’t lower rates, he does think rates can be stabilized. Perry says by working together as a community to attract business and new residents to Vernonia and developing new industry, costs could be spread across a larger and broader customer base. According to Perry costs for things like poles, metal, costs associated with implementing green energy requirements and costs from Bonneville Power are all going up, at about 3% per year. “Those higher costs are going to be passed on to members,” says Perry. “It’s a tough balance.”
Perry went on to say that the WOEC infrastructure has been ignored for years and the co-op is having to play catch-up to maintain and replace aging poles, lines, meters and substations.
Perry said electric co-ops on a state level are currently working together to convince the state that hydro power should be considered “renewable,” which could lower the burden on utilities to meet “green energy” mandated requirements. “I think this is a battle our members are facing, and most of us don’t care about those things,” says Perry.
When asked about adjusting the rate structure to capture more of the operational costs to deliver power in the base charge, Perry was cautious. “How much are you willing to subsidize somebody else’s bill?” he asked. “That’s what it boils down to.” Perry went on to explain that WOEC’s base rate is within the national average; Perry said he thought most co-ops charge between $25 and $40 as a base rate. WOEC just raised theirs to $37. Perry said that WOEC’s reports have concluded that the base rate should be $66 to cover all fixed costs. Perry said that electric utilities have traditionally had low base charges and subsidize those fixed costs through charges for energy use, which Perry says is actually a bad business model. What ends up happening is this model encourages rate payers to find ways to use less energy, which in turn leaves the utility unable to pay for their fixed costs. Perry says the idea of raising the base charge and lowering the distribution charge would work out better for the co-op. The problem is that rate payers don’t want to see the base charge raised. Perry went on to say that people on fixed incomes and those in lower income brackets who live in homes which are inefficient for energy savings would benefit most from a higher base rate. “It’s just a mindset,” says Perry. “We’re so used to a low access fee to the grid that any bump in that base rate causes people to go crazy. You have to give something to get something.”
‘Green energy’ is a current hot topic and buzz word, especially in the power utility industry. When asked about the reality of more energy being created for Vernonia through clean technologies, Perry was realistic. “You can’t get much cleaner than hydro,” he said. He went on to state that he thinks the next form of green energy that the country will transition to in the future is nuclear, though in smaller sized plants. Perry shared a personal experience he had of seeing a scenic hillside in upstate New York that was changed by the installation of thirty-five wind turbines. “It really had a visual impact on the area.” Perry said some people call wind power a ‘medieval technology’ and noted it is a low density form of power that takes up a lot of space for not a lot of return. “Is green energy part of the mix?” asked Perry. “Yes, it’s a part. Can it stand on its own without government subsidies? Maybe, maybe not.” Perry noted that he has added a link on the WOEC webpage under ‘News’ for the ‘BPA Balancing Authority’ which shows hydro, thermal and wind power being produced. “It might be kind of fun for people to click on it and take a look,” said Perry.
Perry was extremely complimentary when asked about the Board of Directors at WOEC. “They are probably one of the best Boards I have worked with,” said Perry. “The reason I say that is because of the diversity you have here on this Board. You don’t have a homogenous Board; they don’t represent one particular group, like ranchers or dairy farmers. To get the quality of people you have here on WOEC’s Board of Directors is phenomenal. I’m glad to be working with these people. They are all smart, they all have different opinions and aren’t afraid to voice them. They are very active and very engaged. It’s a pleasure to work with them.”
Perry turned to current customer dissatisfaction to close our interview. “The Board was very frank during the interview process. They told me they had some issues with ‘member unrest’, if that’s what you want to call it. You could change the whole Board tomorrow to try to do something different. But the reality of the economics is going to hit anybody in the face. It is what it is.”