President & GM Message

Background for January’s 2.91% Rate Increase

WEC Plans to Sell Wrightsville Plant, Understanding How WEC Responds to Winter Storm Outages

Rate Case

Louis: Washington Electric has filed for a rate increase of 2.91%. This is mainly due to rising property taxes, the costs of responding to storms, and general cost increases over time due to inflation. We know no one likes to see a rate increase, and we don’t like to do them either, but this is a fairly modest increase compared to other utilities in the state. Many have either requested multiple rate increases in a row, or large increases of over 10%. 

Our property taxes have gone up quite a lot. I know this is something our members are also experiencing in their personal tax burden and it’s unfortunate that rising property taxes have a rippling impact on the cost of other goods and services, including utility bills. WEC pays property taxes, which have risen 20%. We can’t raise rates in anticipation of rising taxes. The way it works for our accounting is we need to receive our property tax bills first, to know what our tax share is for assets that have shared ownership. It’s called fractional cost. After we know our tax responsibility, we can apply for a rate case if necessary. That’s what happened this time.

Steve: Louis, can we tell our members why WEC is paying property taxes to Vermont towns, and why it is significant?

Louis: Good idea. As members know, WEC is a not-for-profit cooperative utility. It’s true that some nonprofits don’t have to pay property taxes, but there are different classifications for different types of not-for-profits. Washington Electric is a 501(c)(12) and pays property taxes on all its assets, like poles, wires, and substations. The tax is based on a formula set by the state and is used by towns to estimate the value of these assets. We pay property taxes to the towns we serve, just like homes and businesses do. Statewide, property taxes have gone up about 14% on average, but for our specific towns and our specific assets, they’ve gone up 20%.

Steve: Our members’ interests are represented by the nine members elected to our Board of Directors. Each of us is responsible for the financial health of our shared investment in this utility. The Board oversees the major budget requirements, including the assets the Co-op uses to provide reliable service, managing outages, and right-of-way maintenance. We balance the costs of the services WEC provides against the rates needed to reliably provide these services. The Board’s job is to work with staff to ensure that any rate increase is necessary, and the level is appropriate for members to continue to receive reliable and safe electricity. We also determine how much money we can return to members through capital credit retirements.

Louis: I think it’s important to note that returning capital credits is a key part of what we do as a cooperative. Members who’ve been on the lines for some time get their investment back in capital credits. We’re required to do this. The WEC Board, like all boards, looks at the finances—revenue, assets, services, and capital credits—carefully to make sure we’re providing fair and reliable service for everyone.

I invite members to review the charts on page 4 of this issue. I’m a big believer in transparent governance and we’re sharing these so members can compare Washington Electric’s rate increases alongside our fellow utilities over the last few years, and to compare sample bills across utilities for roughly the same power use. You can’t compare exactly because different utilities have different fees and so on, but this is a pretty accurate sample. 

The point is, we at Washington Electric try very hard to keep our bills in line with those of our fellow Vermont utilities, even though we have by far the fewest number of customers served per mile of line and increased costs associated with providing service in a heavily wooded and mountainous area. I always use this as a reminder that our region has never been attractive to for-profit providers of electricity, which is why our forebears formed a cooperative in the first place.

WEC to Sell Wrightsville Hydro Plant

Louis: We’re moving ahead with selling the Wrightsville hydro generation plant. The Board has authorized me to enter into a sales agreement for $1 million or more. We believe it’s the right decision based on our current financial situation and the plant’s output. Steve and I discussed our decision-making process at length in this column last issue.

Even once we reach an agreement to sell, several things still need to be done, including approvals from our lender, the Rural Utility Service, and the state, and we will need to transfer the FERC [Federal Energy Regulatory Commission] license. But we are moving forward.

Steve: It was a challenging decision; one of the hardest I’ve seen since I’ve served on the Board. I felt each Board member had to weigh the real pluses and minuses in their own minds to balance the risks against potential benefits before arriving at a yes/no decision. The Board supported the staff’s recommendation to sell the plant. We will see how it unfolds.

Louis: In the end analysis, depending on what happens in the power markets and RECs [Renewable Energy Credits], selling Wrightsville could be either a slight positive or slight negative for WEC. The only real risk would be if a catastrophic event happened or were imminent at the plant, which would be very expensive for us. The risk of that happening is low, but it does exist.

Steve: The Board was mostly concerned about ongoing maintenance and licensing costs that effectively lead to a high cost of power under the restrictive provisions a reservoir-based hydro plant must adhere to. We are aware the plant needs significant maintenance and upgrades.

Louis: Whether you anticipate maintenance and prevent major issues, or wait until they happen and then repair them, it’s costly either way. 

New Metering System Update

Louis: We’re close to selecting a vendor for new advanced meters. We’re going back to our preferred vendor to finalize some questions before moving forward with the contract. We’re on track to start deploying the system in 2025, and it will take a few years to fully deploy.

Steve: I’ve found it’s common for co-ops to roll out the system in batches to give time for staff to adjust to the new technology and ensure that WEC continues to perform its metering and billing smoothly as the rollout proceeds. So, we’ll be running a hybrid system for a while. We can’t just put our members on hold while we make a change, so we’ll keep running on our current system while we make the transition.

Louis: The new system will give Washington Electric and our members a lot more information about their power usage, and it will allow for remote disconnects and reconnects. This will save us from having to send trucks out, and we’ll be able to respond more efficiently to outages. It will also help us handle things like net metering and heat pumps, which are difficult to manage with the current system.

Steve: It’s also important that we encourage not only our members who are interested in using the new system, but also our staff to make sure they use it effectively, and to develop new rate structures that many could find useful. This won’t happen overnight, but it will be a positive change for everyone.

Louis: And just to remind everyone, most of the new system will be paid for with grant money.

This new system creates a lot of benefits for members as well as making our operations more efficient. Our current system is by omission—if the system doesn’t hear from a meter, we assume you don’t have power—but the new system will automatically alert us when you are out. This is a big benefit for people who are away from home or unable to call us.

We’re required to let members know they can opt out, but rolling trucks for meter reads is much, much more expensive for the Co-op. And if a member opts out, they won’t be able to enjoy the benefits of the new meters, like remote disconnects and reconnects, time-of-use rates, load management tools, or those automatic outage alerts.

Call for Candidates for WEC’s Board of Directors

Steve: In May of 2025, the members of the cooperative will hold its annual election to select three of the nine seats on the Board from among the members of the cooperative. As members themselves, those serving on the Board are there to represent the interests and needs of the members in seeing that the cooperative adheres to its mission. Individual Board members bring a variety of personal and professional skills to the Board table, but the overarching benefit that they collectively deliver is loyalty: loyalty to WEC members’ well-being and quality of life as regards their electric service, and not so much acting upon lofty philosophical goals, perfect though they may seem.  That has been our focus. The electrical grid has been around for a hundred-plus years and is a vital part of modern life. A cooperative electric utility that works for all members and not just a few at the expense of others, to provide an essential service without a profit motive, is as close to a public good that I can think of. It’s important for public power institutions like ours that their members take an interest in how their power is provided and according to standards that they agreed to. I encourage any member who has the interest and willingness to spend some time in serving their community for several years and getting a grounding in how their electric grid works for them to run for the Co-op Board.

Louis: Washington Electric is lucky to have had qualified candidates running for the Board in competitive elections. That’s not always the case in volunteer civic organizations like ours, whether school boards, selectboards, or nonprofit boards. We’ve been lucky in having very qualified people interested in serving on this board.

Understanding Winter Outages

Louis: The remarkable thing about our part of Vermont even as many changes as it’s gone through and is going through, people are so engaged in their communities and care so much for their communities. It’s even more obvious in wintertime than other times of year, when during large storms and outage events, people check in on their neighbors. And people are really prepared to help, whether that’s participating in food pantry drives or knowing somebody may need help and taking the initiative to look in on them.

Steve: Rural Vermonters have always seemed to look out for one another, especially in times of crisis. Washington Electric can’t do it all, but we play our part. If we get information that someone needs urgent help during an outage, we’ll work with emergency services to make sure they get the attention they need.

Louis: It’s essential in our territory because, frankly, having 38 people on our staff to cover electrical needs for the most rural parts of 41 towns is pretty daunting. We rely on our members reporting outages, helping their neighbors, helping their towns, and helping their emergency services departments. I encourage our members to save the checklist WEC publishes annually in Co-op Currents on outage and storm preparation, which ran in our October-November issue. Also, I encourage members to contact WEC if they have a health issue that might put them in jeopardy during an outage, and also, update us when they no longer have a health issue or no longer live in our territory. We maintain files, but peoples’ situations change, and our records go out of date quickly.

I also ask members to be very careful during outages about what info they report to us. We often get reports of trees on lines and trees on roads when they are not. We deploy to health and safety situations first. We do look at all the messages we receive and dispatch differently based on those reports.

Steve: WEC’s main role during major storm-related outages is to get the lines back up on the poles so that power can be restored as soon as possible. Our role intersects with the roles of every other emergency system in our towns and the state. We can’t do everything, but we can make connections. When there is a storm and information is on hand or comes through that someone with health issues needs attention right away, WEC staff contacts emergency services whose role and training is to deal with situations exactly like this, and will respond however they are needed. 

Louis: That’s good information and expectation setting, Steve. I would just add something that members don’t always know. If you’re at the end of 10 miles of line from your substation, and over those 10 miles there are five trees on that line, those all need to be repaired before we can restore power to your house. You may be able to see one of those trees on the line in front of your house but fixing that first won’t solve anything until those other four incidents are resolved upstream.

Steve: Electric power flows from where it is generated along transmission lines to enter WEC’s grid at its substations. For WEC, this transmitted power is provided by VELCO or Green Mountain Power. From our substations, power is delivered to you from a branching network of electric lines. One or more breaks anywhere along this path, regardless if they’re on WEC’s lines or not, will cause your power to go out. That’s how electricity flows. If we don’t restore power to as many people as possible as quickly as possible, we may be assessed financial penalties. That’s how regulation works. We’re regulated in how we operate during emergencies just as closely as we’re regulated in day-to-day operations. I’m proud that WEC works with emergency services to get the job done and to keep our members as safe and well as possible under difficult circumstances.