WEC’s rate redesign, incentivizing beneficial electrification, now in full effect
Co-op continues to support broadband rollout, Community Fund donations, and hosts two member events in September
New rate design now in full effect
Steve: The final phase of WEC’s rate redesign took effect July 1. According to the Public Utility Commission’s ruling, we’ve been required to implement the changes in stages over three years. We’ve increased the monthly service charge and correspondingly dropped the energy charge.
If we’re going to incentivize beneficial electrification, we have to reduce the cost per kilowatt hour of electricity. But we still have to generate the same revenue we need to operate. That’s why we increase the monthly service charge to balance the reduction in the cost of energy.
It’s become widely believed in Vermont and beyond that replacing fossil fuels with efficient and careful use of electricity makes a lot of sense. The change to the customer charge and kilowatt hour rate is one small piece of that broader change.
– Louis Porter
A secondary reason is to partially compensate for the loss of revenue due to net-metering. Regardless of one’s opinion of the benefits of net metering, the state net metering tariff makes it more challenging for utilities to cover the cost of providing service when some members are able to partially opt out of paying for the grid infrastructure and service they use. Net metering causes instability in our revenues, but all members – net meterers or not – pay a monthly service fee to access our services.
The downside is this approach can increase the bills of people who are trying to save money on their electric bills by being very efficient. This was a big change for WEC, which for years had been trying to incentivize reducing one’s electric use. We’ve transitioned because of state policies saying it’s preferable to use electricity as long as it’s generated renewably. And by 2014, WEC was recognized to source 100% renewable electricity. So with this rate design, we are not helping some people whom WEC had incentivized in earlier years. At the same time, it’s a necessary step if we’re trying to meet state goals for beneficial electrification. Nonetheless, conservation remains a practical approach to our challenge.
Frankly, I don’t think we’re going to consume our way to mitigating climate change. I still think being efficient with all energy use is important to keep in mind.
Louis: I have a positive view of this change, in which the customer charge is one symptom. For many years, Washington Electric was unusual in that it tried to reduce use of the product it sells. That was done for a very good reason: to be efficient and reduce power use. That’s changed with the realization that the types of power we use have different effects on the climate, and fossil fuels are far worse than renewable electricity.
We continue to do a lot to make sure people have access to resources to prevent wasting electricity. At the same time, it’s become widely believed in Vermont and beyond that replacing fossil fuels with efficient and careful use of electricity makes a lot of sense. The change to the customer charge and kilowatt hour rate is one small piece of that broader change. While I agree with Steve that we’re not going to consume our way out of the climate change crisis, and that it’s essential to prioritize efficiency and changing our consumption of all kinds of energy, I do think it makes sense to incentivize use of electricity where it’s efficient and effective.
Steve: When we implemented this rate design several years ago, we got pushback from members who use so little electricity and are unhappy that their bills went up. We can expect pushback from a fraction of our membership.
Louis: And very understandably so. We incentivized people to reduce their electricity use, and now we’re increasing their base charge.
Steve: We’ll keep working to educate our membership. Since WEC became 100% renewable, we are in a position to act on beneficial electrification. The service charge is higher, but as we replace fossil fuel vehicles and devices with electric ones, members should find their total energy bill – what they pay for gasoline, kerosene, natural gas, oil, biomass, and so on – goes down.
Steve: Broadband is still on a lot of peoples’ minds. Even though WEC is not going to be providing the broadband service, we are still actively working with the communications union districts (CUDs) to get them to the stage of installing fiber on WEC poles.
Our operations crew is performing very well in preparation for broadband rollout. They’re laying in stocks of new poles to get broadband out to WEC members fairly soon. WEC owns all its own poles, so we should be relatively efficient in working with CUDs to facilitate their installation of broadband on their schedules.
Louis: We just took delivery of a new digger derrick truck that will allow us to have two crews setting poles rather than one, and a new pole trailer, so we can respond to the make-ready needs of the CUDs. What it does is dig holes and set poles in them.
Beyond broadband make-ready work, this is a piece of equipment we needed soon, in any case. It will certainly be a benefit to use in maintaining power lines and our regular power infrastructure as well.
Louis: One of the exciting things about this job for me is working on the Community Fund. The grants go primarily to help groups working in our territory, and to help people in our territory. But one thing I really like a lot is we focus on those organizations that don’t have a robust fundraising infrastructure of their own – whether that’s local food pantries, or parades and celebration events, or other benefits for the community.
These are organizations that, like WEC, are very connected to their communities, involved in the day-to-day life of people in the towns we serve. They operate like we do, reliant on volunteers and community support. It feels right and fitting we’d support organizations doing that kind of work. Our WGDR donation [see “I love WGDR, and the chickens love it, too”] is a good example: that’s a service that many people in our territory listen to and are aware of, and it exists for the same reason WEC does: there was a need that wasn’t being provided, and wouldn’t be provided if it didn’t exist, and community members made it happen.
Steve: When we say WEC is supporting these valuable community activities and functions, we should point out that WEC, the utility, is not doing this. These are WEC members donating their capital credits every year and saying, “I want WEC to select deserving organizations my donation goes to.” In addition to the community receiving the benefits, it’s the community donating the resources to do it. WEC is happy to be the conduit for our members’ generosity.
Louis: Exactly. And any effort like this shows a number of small donations – the amounts members donate from their capital credits – come together to have a big impact on these organizations’ missions.
Louis: We’re hosting a member cookout at our Operations Center on Saturday, September 10. We missed out on in-person Annual Meetings for the last couple of years because of Covid. We also want to welcome members to the warehouse to see WEC’s field operations. Most people haven’t been there for a few years. Meet fellow members, meet members of the Board, and talk in an open way about the Co-op and our communities. It’s really exciting for me as a new GM to have that opportunity. I’m very much looking forward to it.
We also have a new training yard that the line crews built at the warehouse, a series of poles and wires that crews can work on to do our training. It’ll be an opportunity to see what that looks like as well.
There are real people who provide this service using investments that Co-op members are willing to make. It’s interesting and entertaining to meet the people involved in providing your power.
– Stephen Knowlton
Steve: This is an occasion merited by the fact we haven’t had the opportunity to meet with interested members. We users of electricity just flip a switch and turn it on. I’m fascinated to go to a place like the warehouse to see what’s needed to actually provide this service. To actually see all the equipment WEC needs to provide reliable service in all weathers. I’m always impressed by it, and it’s a recognition to me that nothing I get is easy or can be taken for granted. There are real people who provide this service using investments that Co-op members are willing to make. It’s interesting and entertaining to meet the people involved in providing your power.
Louis: We’re used to it, but we shouldn’t assume that others understand how it works, why it works, even that it works. This gives people a picture into how 35 people or so provide electricity for 12,000 households.
There’s a very significant asset that Washington Electric owns up in Coventry. It’s something that belongs to the members and that provides 70% of their power. We will open it to visitors on Saturday, September 17, when Casella holds their first open house at the landfill in two years. This is a chance to see five massive engines running off of landfill gas that would otherwise be flared into the atmosphere. Instead, it provides power for a large number of households around our 41 towns. I think it’ll be interesting and educational for people to see what the plant looks like and how it operates.
Steve: It’s exciting, it’s noisy, and it’s interesting for people to know exactly how their power is generated, especially to see one of the variety of creative ways in which local renewable energy is generated around the state. It’s going to be a growing interest in the coming decades how utilities either reach or, in WEC’s case, maintain our commitments to getting power from renewable energy resources.
Louis: There’s been a tremendous amount of renewable development of many types and scales. Coventry is baseload renewable power. Provided the gas is there, it’s on and running. That’s a remarkable and valuable thing to have. Washington Electric was one of the pioneers in developing it. It fits well with both the environmental mission of Washington Electric and our provision of electrical power.
Louis: We’re an overwhelmingly residential territory in terms of power use. We’re unlikely to see in Washington Electric territory major new manufacturing or retail facilities of large scale that would be big power users. As Vermont is increasingly appealing to people from other places, both for the potential to work remotely and for concerns facing people in other parts of the country, we’re going to see the attractiveness increase of living in our territory. It’s hard to say how much of our increase in membership is due to those factors, but I’d guess what we’re seeing is the start of a trend that’s going to continue, people seeing our corner of Vermont as an appealing place to live and work if you have a job that allows you to work remotely.
Steve: I admit I didn’t arrive in Vermont with the express idea to be served by an electric co-op, but now that I am, I’m more interested in the idea of public services, whether it’s electricity or food co-ops or whatever. I hope new members will take to the model and participate in cooperatives and, when they can, consider serving on the board of our Co-op to serve their community as representatives of their fellow members. There’s a benefit to participating in getting our power from a co-op owned by ourselves, not tasked with making returns to investors outside our community. That’s what I’ve learned as a Co-op member; I’m really a member of a community I didn’t initially realize I was a member of.
Louis: We’re serving more people: more lines, more transformers, more everything. It has an impact on member services and operations. A bigger impact for us is that the expectations new members have are very different, if they’re coming from someplace not rural and served by a utility with a much denser territory. In an area like ours with relatively few members per mile, storms have a big impact, power lines are away from the road, we have a relatively small staff. A lot of people are not accustomed to service interruptions, the length of time it takes to restore power, and other things people from this area are used to. They’re not wrong to expect a lot of the service they’re provided by the Co-op. It does mean there needs to be a process of education in both directions, both from members to us in their expectations and priorities regarding the level of service vs. the cost of electricity; and from us, explaining it’s just not the same as getting your electricity in a dense urban area.
Steve: If we’re getting a strong influx of new members, we obviously have to invest money in providing service to them, whether that’s new hookups, pole extensions. Not all this can be covered under “contribution in aid of construction.” Are there investments the Co-op will have to make? Loans the Co-op will have to take on, which we’ll pay off presumably through increased revenue? It’s not a given that more customers means more revenue.
Louis: It’s also important to note we expect members to pay for costs they cause. While of course there are additional costs to the Co-op, we try to adhere to the principle that those who cause the cost pay for it. Upgrades to service are paid for by the member in general, and we try to assign them fairly.
Louis: There’s an issue that utilities in the state face, which is: How do we make sure that the benefits of electrification and new electric technology and knowledge are shared among people in a fair and equitable way, whether their income allows them to fully participate or not?
One of the big challenges for people who want to install a charger for an EV or use some other technology is that to take advantage of that beneficial electrification technology, their electrical infrastructure may need to be upgraded. ReWire is a pilot project to figure out how to provide assistance to income-qualified members for getting some of those upgrades done.
Washington Electric started the pilot with a grant from VLITE and in partnership with Capstone. Since then, the state and governor have put $20 million into a program very similar to ReWire. What Washington Electric learns from ReWire will be crosspollinated into the state program, including in Washington Electric territory, and help utilities across the state, and the state itself, on a much larger scale.