General Membership Questions
Philosophically, the cooperative is a family. In reality, just like a family, every action by 1 member has an impact on all the other members. As a member of a cooperative, you are not only a consumer but also an owner of the system. There are no faceless, far-away people making money off your electrical usage. We’re all in this together. Really.
Section 5 of the Bylaws: It is expressly understood that amounts paid for electric energy in excess of the cost of service are furnished by members as capital, and each member shall be credited with the capital so furnished as provided in these bylaws.
Each member shall make available to the Cooperative a suitable site, subject to approval by the Cooperative, whereon to place the Cooperative’s physical facilities for the furnishing and metering of electric service and shall permit the Cooperative’s authorized employees, agents and independent contractors to have access thereto for inspection, maintenance, replacement, relocation or repair thereof at all reasonable times.
As part of the consideration for such service, each member shall be the Cooperative’s bailee (a person or party to whom goods are delivered for a purpose, such as custody or repair, without transfer of ownership) of such facilities and shall accordingly desist from interfering with, impairing the operation of, or causing damage to such facilities, and shall use his best effort to prevent others from doing so.
Section 6 of the Bylaws: Each member shall pay monthly, at rates which shall from time to time be fixed by the Board of Directors, for all electric energy purchased from the Cooperative. Each member shall pay to the Cooperative a minimum amount per month regardless of the amount of electric energy consumed, as shall be fixed by the Board of Directors from time to time. Each member shall also pay all amounts owed by him or it to the Cooperative as and when the same shall become due and payable.
Bylaws and Service Rules & Regulations are available from the Western Oregon Electric Cooperative (WOEC) website.
Sources: What It Means to Be a Coop Member, Ruralite, January 2017, Ruralite Page 4
The 7 Cooperative Principles, Ruralite, February 2017, Page 4
Take control of your account with SmartHub
Check your main electric box, circuit breakers, and/or fuse box to make sure nothing has tripped. You don’t want to be billed for an expensive service call with a truck and 2 linemen if you’ve just blown a circuit breaker (Service Rules & Regulations, section 5.8).
- Check with your neighbors, if at all possible, to see if they have power.
- If it’s not your personal system, call the West Oregon Electric Cooperative (WOEC) office.
If everyone with an outage calls–even if the lines are busy, please keep calling—this helps the crews isolate where the actual problem is. Even if it’s not normal office hours, please call it in. Your call will be routed to an after-hours answering service that will forward your information to Dispatch. They will not be monitoring social media platforms to determine where the problem is, especially on weekends. In cases of long-term, extended outages, staff might be able to give information on the WOEC Facebook page.
Sources:
What Happens When the Lights Go Out?, Ruralite, January 2019, Pages 4, page 32
Storms Can Bring Power to a Stop, Ruralite, March 2017, Page 4
An annual membership meeting is required by both our cooperative by-laws as well as by Oregon statutes covering corporation law. Approximately half the cost for the annual meeting is taken up by member notification and balloting.
The rest is used for the event site, catering, and inducements for members to attend to create a quorum. This is when election results for the Board of Directors and/or any measures requiring a vote by the members are finally tallied, and the results are announced. The financial report for the previous year is given, as well as updating on current projects. A Q&A period is also held.
WOEC has first-generation–Gen 1–“smart meters”, the system known as Automated Meter Reading (AMR). These meters are like a 1-way street, with meter reading information sent only 1 way back to the office on a daily basis. Our current AMR system is outdated at 20 years of age.
The next Generation—Gen 2—is called Advanced Metering Infrastructure (AMI), and it can be compared to a 2-way street. WOEC will upgrade to this system in the future. Currently, they do have 1-way information systems that send information back to WOEC via Power Line Carrier technology that operates at 60 cycles per second, the same as the electricity coming into your house. There is no Radio Frequency transmission from your meter.
You can log into your Smarthub account and monitor your own usage. The co-op has no control over your electrical usage.
What It Means to Be A Co-op Member, Ruralite, January 2017, Page 4
Squirrels and trees are the biggest source of electrical outages, not just here but across the United States, so being proactive in preventative brush cutting and tree trimming is absolutely essential to keeping our system alive and limiting the number of/and duration of outages.
The reduction in duration of outages from 2,208 hours in 2014 down to 834 hours in 2016 tells the story of how critical stepped up right-of-way maintenance is. The consumer shall grant any necessary permission to enable the Cooperative to install and maintain its facilities on the premises of the consumer so as to serve the consumer and the utility system as a whole.
The Cooperative shall have the right through its employees, or other agents, to enter upon the premises of the consumer at all reasonable times for the purpose of reading, inspecting, maintaining, repairing, or removing the metering devices, wiring, or other facilities of the Cooperative, and also for the purpose of tree trimming, right-of-way clearing and other vegetation management.
The Cooperative has a legal obligation concerning tree removal, tree trimming, and right-of-way maintenance on all existing primary and secondary electrical facilities to maintain such facilities in accordance with the National Electric Safety Code, the Rules and Regulations of the Oregon Public Utility Commission, and Rural Utilities Service requirements.
The Cooperative may, through its employees or other agents, enter the consumer’s property at reasonable times in order to undertake needed vegetation management work. The property owner agrees not to interfere with such activity. This means no locked gates without giving WOEC a current key or combination to the lock for access.
Service Rules & Regulations 20.3
What it means to be a co-op member, Ruralite January 2017, Page 4
OSHA does not allow for untrained personnel to be working within 10 feet of electrical power lines. This is no place for amateurs, and the professional tree cutting crews are unionized to maintain professional safety standards. It is not only safer for the properly trained and equipped workers, but reduces potential for damage to the system. It is not cost-effective for WOEC to maintain its own tree-cutting crews.
In 2017 burying electric lines cost 3 times as much as running them overhead from poles. It’s also more difficult and time consuming to isolate problems or breaks, and then to dig them up, repair them, and re-bury them especially in rugged terrain; typically, this takes place during an emergency and is paid out in overtime. For most of our grid, it makes more economic sense to keep the lines on poles, even though they are more vulnerable to trees falling and squirrels. Now when cables are undergrounded, they are run through conduit to help protect them from accidental damage and corrosion.
History Questions
West Oregon Electric Cooperative was created in 1944, carved out of remote rural areas that the encircling for-profit utilities did not wish to take on due to the excessive expense for installation and maintenance.
The Rural Electrification Administration (REA) was created in 1935 to get electricity to rural Americans. The REA program offered low-interest federal loans to power companies willing to deliver electricity to rural communities. Most private power companies would not take advantage of the loans offered by the federal government, so rural communities organized cooperatively to get electricity.
In 1936, Congress created the Rural Utilities Service (RUS), formerly the Rural Electrification Administration (REA), offering low-interest federal loans directly to rural people, often through cooperatives. Today, the use of low-interest, long-term loans continues. This model ensures that cooperative members 10, 20, 30 years down the line will be paying for the equipment as they use it, instead of a large, insupportable payment coming due at the time of repair, maintenance, or replacement of a big-ticket piece of equipment.
Sources: WOEC website and The Not-For-Profit Difference, Ruralite, January 2018 (PDF)
The co-op has territory in 5 counties, over 1,224 square miles, with approximately 4,500 members. It actually covers 2 separate but closely located service areas. It was essentially and implausibly formed out of territories no for-profit electric utility wanted because they were so difficult and expensive to service and maintain.
Miles and miles of trees over rugged, often nearly inaccessible territory, combined with lots of driving time, is an easy yet correct part of the answer.
WOEC’s rates are currently the highest in Oregon. The geography, terrain, low customer-to-mile-of-line ratio over most of the territories, and the oddly spread out territory make routine and emergency maintenance and repairs extremely difficult and expensive, both in terms of time and man-hours expended.
There are no other comparable electric utility territories in terms of the distances covered, the ruggedness of the terrain, the actual size of the territory, and the coverage by trees and density of underbrush. To compare states, according to WalletHub, Oregon is 43rd lowest in electricity costs with an average monthly electricity cost of $107, while South Carolina, with an average monthly electricity cost of $176, is the highest.
Also, most electric utilities are able to reduce costs by having major commercial accounts carry a lot of the cost burden, thus cutting costs for residential accounts. It is the norm for heavy industrial loads to make up around 50% of a utility’s revenue base. This means all the residential/small farm ratepayers together in a typical utility only pay half the cost of running the utility. At WOEC, it’s 90%. It’s 10% over the hill in Clatskanie.
Another factor here is the intense weather events that pop up. Big storms cause a lot of damage, and costs are not always covered by FEMA; when they do cover costs, it’s only up to 75% of the actual cost. Storm damage can be a big hit to the cash reserves, and 1 of the main reasons we have to build up this fund every year. Severe winter storms have been a costly annual event for WOEC since its beginning; it is just part of living here.
Source: Wallethub website
Touchstone Energy Cooperatives is a federation composed of more than 750 local, consumer-owned utility cooperatives in 46 of the 50 United States, serving more than 30 million members.
Among other things, they support training in strategy development and execution best practices. Touchstone gives member engagement resources, advertising, communications campaigns, employee educational opportunities, business development programs, and cooperative performance resources.
Source: Touchstone Energy website
Other organizations that WOEC is a member of:
The National Rural Electric Cooperative Association (NRECA). In 1942, America’s electric cooperatives banded together and formed the National Rural Electric Cooperative Association. The organization continues to represent electric co-op interests in Washington, D.C.
Source: NRECA website
WOEC is also a member of ORECA, Oregon Rural Electric Cooperative Association, which represents and promotes the interests of electric cooperatives and their members. Their goals:
- Protect the legislative and regulatory interests of electric cooperatives to maintain least cost reliable power.
- Protect local control for electric cooperatives’ governing boards.
- Oppose unnecessary regulation without demonstrated benefits.
- Maintain the ability of cooperatives to provide new member services.
- Support regional efforts to maintain the benefits to cooperatives of hydro-based power at least cost.
- Communicate with and educate elected officials on state and federal legislative and regulatory affairs impacting co-ops.
Source: ORECA website
PNGC: PNGC Power is a Portland-based electric generation and transmission cooperative owned by 15 Northwest electric distribution cooperative utilities with service territory in seven western states (Oregon, Washington, Idaho, Montana, Utah, Nevada, and Wyoming).
Our company creates value for its member systems by providing power supply and other management services. PNGC Power is a top aggregator of geographically diverse loads in the region and became the first electric cooperative in the country to receive a power marketing license from the Federal Energy Regulatory Commission. Benefits:
- More buying leverage
- Access to advanced technical capabilities
- Financial strength, backed by $964 million in assets of member-owners
- Risk management capability and increased control
- Ability to meet customers’ power needs in the new era of public power
Source: PNGC power website
Investor-owned utilities have a primary goal: the need to make money for their investors. In other words, they must make a profit over and above actual operating costs. When electricity was coming to our neck of the woods, no for-profit company wanted our territory with too few customers to line ratio. Cobbling these orphan areas together created the awkward and disjointed territory WOEC now covers.
A cooperative model solved the problem of supplying electricity to difficult areas while not over-charging, so someone far away can make a profit. According to Bob Perry, former General Manager, “We’re a $40,000,000 not-for-profit corporation with about $10,000,000 in revenue each year. We’re a business. We have a margin that we have to make, but we’re not going to charge any more than we have to, so we can operate at cost.”
The expenses WOEC incurs to operate the utility include repair and maintenance of its infrastructure, salaries for employees, depreciation on equipment, and interest on loans. Any profit over those expenses is considered a margin.
The margin WOEC makes may sound like profit—or surplus income—but lenders require the co-op to make a certain margin to ensure repayment of loans. Those covenants are agreements the co-op will have a certain amount of money set aside, and are based on a percentage of the amount of interest the co-op is budgeted to pay each year.
Source: Understanding Capital Credits, Ruralite May 2017 Page 4
WOEC, like all co-ops, is a private, not-for-profit organization that is owned and operated by its members. The cooperative model was created so that rural communities could bring electricity to themselves by using low-interest government loans—a pay-as-you-go model that insures that future members will be paying for equipment as they use it.
WOEC is a “not-for-profit”, not a “non-profit”. Nonprofit and not-for-profit are terms that are used similarly, but do not mean the same thing. Both are organizations that do not make a profit, but may receive an income to sustain their missions. Nonprofits have volunteers or employees who do not receive any money from the organization’s fundraising efforts.
WOEC follows a not-for-profit business model, which doesn’t mean the co-op doesn’t make a profit. It means any profits the utility makes go back into running the utility, or in some rare instances, back to the members.
Member-serving nonprofit organizations create a benefit for the members of their organization and can include, but are not limited to, credit unions, sports clubs, advocacy groups, and cooperatives.
Another difference between nonprofits and not-for-profits is that nonprofits are tax-exempt. While WOEC does not pay income tax on its net income, it does pay some taxes. It does pay a franchise tax to the city of Vernonia, where the headquarters is located. All members, no matter where located, pay a portion of this tax, while Vernonia residents pay the larger proportion of the tax.
According to the CFO, Daniel Huggett, “We do pay a gross revenue tax, which is paid in lieu of property taxes on our infrastructure—our transmission and distribution poles and lines. We do pay property taxes on our land and buildings, but we don’t pay on those other assets that every member owns a part of, that allow us to run the utility. We don’t pay an income tax because we don’t show a net income. We show the margin.” The margin is what’s used to pick up the slack for emergency repairs from bad storm damage, as an example.
Sources: Understanding Capital Credits, Ruralite May 2017 Page 4, and What It Means To Be a “Not-For-Profit”, Ruralite April 2017 Page 4;
The Not-For-Profit Difference; Ruralite, January 2018 Page 28
Organizational Questions
Our purpose is to ensure that you enjoy the benefits of safe and reliable electric service.
WOEC is overseen by a democratically elected Board dedicated to keep the co-op financially viable into the future. There is no direct governmental oversight, such as the PUC (Public Utilities Commission), since WOEC isn’t allowed to sell to everyone, but is limited to service within its set boundaries. This is referred to as a “natural monopoly”; this is required to maintain a revenue stream to protect the viability of the co-op so it can continue to serve its members.
A General Manager, an Office Manager, a Chief Financial Officer, and an Operations Manager run WOEC at the management level. They are non-union. Support staff covers billing, member services, etc. The support staff is union, as are the linemen.
Linemen are union and go through a multi-year training/apprenticeship program before they are certified to work on the grid. To become a lineman apprentice, you must be at least 18 years of age, have a high school diploma or GED certificate, and submit an application to a local Joint Apprenticeship Training Committee (JATC). Some JATCs have additional requirements: a grade of C or better in algebra and a commercial driver’s license.
Once someone applies to an apprenticeship program, they have an interview and safety orientation before being paired with power company linemen and starting on-the-job training and classroom instruction. An apprenticeship is a system of training a new generation of practitioners of a trade or profession with on-the-job training and often some accompanying study (classroom work and reading).
Apprenticeship also enables practitioners to gain a license to practice in a regulated profession. Most of their training is done while working for an employer who helps the apprentices learn their trade or profession, in exchange for their continued labor for an agreed period after they have achieved measurable competencies. Apprenticeships typically last 3 to 7 years. People who successfully complete an apprenticeship reach the “journeyman” or professional certification level of competence.
The Co-op already uses mostly government-backed low-interest loans through the RUS that do not have an early payoff option. This precludes the use of USDA grants. Even if there were grants available, simply applying doesn’t imply that they will be received.
This is how West Oregon Electric Cooperative (WOEC) has been run for 75 years. Here’s why: As originally conceived, an electric cooperative is designed to run on low-interest government loans. An electric utility is a natural monopoly with a dedicated revenue stream, and thus the lender (taxpayer) is guaranteed payback. That’s why there are audits by the lending agencies. The expectation is that the entity will outlive its current management, board, and many of its members, but it must stay financially viable to serve members generations into the future.
The money must be borrowed; otherwise, it comes directly from the ratepayers, in what could often be an extreme bump to the monthly bill. There is no reason for a member to pay today for a substation or other system upgrade that is still going to be here and working decades from now. It’s unreasonable to ask members to fully pay for something today when they may not be here to use it in 10 or 20 years.
Things in a utility system constantly deteriorate and wear out, and are in need of replacement. New debt is brought on as old debt is retired. That’s how businesses work.
WOEC, like other rural electric utilities, accesses funding for capital investment projects through the National Rural Utilities Cooperative Finance Corporation, known as CFC, or through the U.S. Department of Agriculture’s Rural Utilities Service.
Running on a debt system is what makes the cooperative business model sustainable.
Understanding the Need for Debt Ruralite February 2019, Page 4