WEC Buys a Ford F150 Lightning, Surpasses 1,000 Net Metering Members
An increasing number of members are using electricity for charging EVs and powering cold climate heat pumps and hot water heat pumps for their primary heat and hot water. So there’s a group of members who are depending more on electricity for more purposes, and that presumably sparks an interest in having electricity be reliable, because more of your well-being depends on having electricity whenever you need it. – Stephen Knowlton
I would rather answer to and return money to my community members than multinational corporate investors. I would not say it’s any less work to be organized as a co-op than to be a publicly traded entity. There’s a lot of work and compliance and I think it’s worth it, but it is also worth recognizing there are a lot of people at Washington Electric who do a tremendous amount of work to make it work as a co-op. – Louis Porter
WEC’s Fleet Adds an EV
Louis: Washington Electric has purchased an all-electric Ford F150 Lightning. We need a vehicle for use both in the field and for staff travel, so its primary use will be offsetting staff mileage and field work. We started talking about whether we should do that with an EV before the expiration of federal tax credits. Even though WEC is a not-for-profit we’re eligible to use the federal incentive without the tax liability to offset it. The incentives brought the cost to just under $60,000. It made sense to us, given the rural nature of our territory, to get an electric vehicle that had high clearance and room for tools in the back. We settled on the F150 Lightning because we can use it in the field as well. It has a 300 mile range between charges, and we plan to have a charger at both the warehouse and the office.
Purchasing an EV makes sense for us, given we’re in the electrical distribution business and given WEC’s environmental mission. It’s our judgement that the tech for bigger models of all-electric trucks, like the bucket truck, is not a great fit for our territory, given the long distances crews travel and occasionally, unfortunately, the long duration of our outages. Our territory ranges from Wheelock to Tunbridge, which is more than 70 miles, and that’s pretty long if you’re going from one end to the other several times during an outage.
Steve: As an EV driver myself, I find that a work vehicle that can be used in a relatively local range is ideal. The WEC Board felt that the F150 Lightning fits the bill, and we agreed the Co-op was wise to not go with a bucket truck at this time for the reasons Louis mentioned.
Louis: A number of other utilities have EVs: VEC, BED, GMP [Vermont Electric Co-op, Burlington Electric, Green Mountain Power] — so this is our foray into that. And the climate change benefit is a big part of it. We offer incentives to members for using EVs, so it makes sense for us to invest in EVs for our own work as well.
Steve: It’s long been WEC’s culture to be environmentally conscious and this is reflected in WEC’s mission statement. Ever since I’ve been on the Board there’s been discussion from staff and Board members about not only selling renewable power but being conscious of our environmental footprint of our operations. For example, WEC has not used herbicides in clearing its rights-of-way for several decades. The Board agreed this EV is a good operational choice for WEC.
Louis: It’s more expensive versus a new Toyota Tacoma, but after the federal rebate, not that much more expensive. You’re talking about $10-15,000, which of course we expect to make back in lower costs of operation, maintenance, and fuel.
Regulators Convene Utilities To Discuss Resilience
Louis: This summer the DPS and PUC [Department of Public Service and Public Utility Commission] started an extensive process of meetings and workgroups about what resilience means for every Vermont electric utility and their members or customers. They’re aiming to wrap up this process by the time the Legislature reconvenes. It’s been quite extensive and has involved a lot of regulators and experts from outside the state, including academic experts and climate and weather experts.
I think that the core question is a valid one: which is, roughly, what is the expectation of electrical customers and members for what their utilities are going to spend to address resilience and reliability? Is each utility around the state spending enough, too much, and is it on the right projects, and how do we improve service with increasingly damaging and difficult storms? However, I and other utility leaders have been somewhat frustrated by the broad scope of the conversation, and we’ve asked for more focus on what regulators see as actual problems. Regulators agree this will be different in every utility territory.
One outstanding question none of us have an answer to yet is what FEMA reimbursement for disasters will look like going forward, and how that changes investments in reliability and resilience. For public power utilities like ours, it’s a very different calculus to figure out what investments in reliability pay off versus responding to outages, compared to a utility like GMP that is ineligible for federal reimbursement after disasters. If we continue to receive FEMA reimbursement, what makes sense to spend on reliability investments is very different than if that funding does not exist.
Why it matters to members is that I think we’re seeing an increasing divergence in the opinions of Washington Electric’s membership. Spend more to increase reliability, which is reflected in electric rates. Spend less, and rates don’t rise as rapidly, but reliability is likely impacted. I think the difference of opinion is exacerbated by net metering. For net metering members, who don’t pay for the full amount of electric service they receive, there’s a disincentive to advocate for paying less. In other words, it’s easier to advocate for a more robust electric grid if you’re not paying as much as your neighbor for grid investments that you all benefit from.
Steve: Louis’s focus with the Board’s support is to improve outage management in the face of what appears to be increasing storms and damaging weather. In addition, an increasing number of members are using electricity for charging EVs and powering cold climate heat pumps and hot water heat pumps for their primary heat and hot water. So there’s a group of members who are depending more on electricity for more purposes, and that presumably sparks an interest in having electricity be reliable, because more of your well-being depends on having electricity whenever you need it.
Louis: And more of our members are home more of the time, working and going to school from home, and we have an aging population. More people are reliant on electricity for more hours of the day.
Steve: Anecdotally, I’ve found some members who’ve been on WEC lines for some years assume outages will come and go, and hunker down, maybe with a generator, until the power comes back on as it inevitably will. For the reasons above, some others are more concerned about any outage, whether short or long-term, because it affects their lives to a greater degree. I’m pretty sure I haven’t met any member who doesn’t mind an outage. It is clear to me that members are affected differently by outages both because of where they live and how much they depend on electricity. So we’ve come to realize that our members have a range of concerns during an outage that we must address.
Louis: And readers can tell even from what Steve and I are discussing the directions this type of conversation can go. It goes from what type of robust infrastructure makes sense, to what the appropriate level of spending on it is, and how you fairly distribute that across your territory—when a lot of utilities have a wide variety of members who suffer different impacts from outages. If you’re a Washington Electric member at the end of a 15 mile line from the substation, you’ll see more outages than if you’re three miles from the substation. How do we spend our members’ money in a way that’s fair, when some live farther out on the lines than others?
Steve: Of course, following general standards for resilience and reliability are of importance to our regulators to ensure all utilities are up to scratch in restoring service to their customers.
Louis: Utilities have a complex relationship with regulators. Regulators advocate for utility members and customers, provide guidance and help, and sometimes facilitate grants for utilities, but at their core they’re regulators, and that often means improving—and increasing—regulation. There will likely be increased regulatory requirements of some kind that come out the other end of this. It’s our aim to make these reasonable and appropriate, and that improve the level of service members get without unduly increasing the cost they face.
1,000 WEC Net Meterers
Steve: The thousandth net metering array just came online. It’s a milestone. A thousand net meterers is roughly 10% of our members. It signifies that solar power, for all its benefits and weaknesses, is a significant source of electricity on WEC’s grid. At this time, all solar electricity on WEC’s grid is net metered, and at this 10% level of penetration, exerts upward pressure on electric rates for other WEC members.
Louis: There are a few factors that are impacting the business of net metering and has left some solar developers struggling or even facing bankruptcy. Tariffs have an impact when most of the components are made overseas, and the end of some federal programs will also have an effect.
I don’t think those factors will have as dramatic an impact in Vermont as you might expect, because Vermont’s system is weighted heavily toward the net meterer and installer’s benefit. There may be some short term supply change hiccups due to tariffs, but the financial benefits of net metering to members and developers in Vermont are very strong, and we’ll continue to see systems deployed in our territory and Vermont overall.
Second, the reductions in rates from the Public Utility Commission are pretty small for new system owners. Owners of existing systems in some cases got higher rates. And keep in mind, that’s against a backdrop of massive decline in the cost of panels over years. A main change in the recent bill changing the Renewable Energy Standard was to curb what are essentially merchant generator projects from continuing to take advantage of rates intended for homeowners with solar on their roof or in their backyards.
A lot of Washington Electric’s territory is negative load, or close to negative, when solar is producing well. Why that matters is we have power contracts and generation plants we own that produce electricity, and we’re 100% renewable, which effectively means that solar power is not displacing fossil fuel power to be used by WEC members. It results in an excess of renewable power we sell on the market. It’s possible that power is replacing fossil fuel generated power in other parts of New England, but it’s not really replacing fossil fuel power used by WEC members.
WEC estimates a million dollar per year cost shift from net metering members to non-net metering members for the price the Co-op is required to pay for net metered power. In other words, net meterers collectively receive a million dollars in benefits from other non-net metering members once the benefit of that net metered power is taken into account, like offset load and no transmission costs.
Steve: In a nutshell, it’s an outdated incentive and there are environmentally beneficial incentives that could be a lot more effective and equitable these days. The introduction of solar to the grid has changed the grid itself, and while solar is a good thing, it requires attention to address its intermittent nature now that we are coming to depend on it.
Member Survey
Louis: Every five years, Washington Electric does a survey of its members. This year we’re doing the survey all online, rather than online and telephone. The reason is because it’s difficult to get people of all demographics to answer surveys on telephones, because there’s so much spam and robocalling out there. The other reason is surveying members online allows us to ask more questions, and we’re asking members what kinds of questions: like what balance in reliability and cost they would like to see, and what kinds of beneficial electrification incentives they’re looking for. Finally, by doing it online we’re able to open it to all members to get as wide a spectrum of input and responses we can.
We also have an option for those without internet access to call the office and get a written survey.
Steve: We are all eager to perform this survey, and we review the results quite carefully to see what our membership prioritizes, and how we’re doing in specific areas. Also of interest to us is what priorities may have changed since the previous survey and what consistently remains the same.
Louis: It also allows us to compare what WEC has done in the past, because we ask similar questions in these surveys, and how we’re doing compared to other cooperatives around the country, especially our neighboring co-op VEC. So we can get a pretty good picture of areas we need to work on and where we’re doing well. Everybody would like to have greater reliability, more services, and lower rates. Those have to be balanced against each other.
Steve: Distilled, it gets down to what do you want the Co-op to invest your money in for the services you prefer? As a cooperative; we use the rates you pay to make it better, so we want to have the best information we can about what’s important to members.
October is Co-op Month
Louis: I’ve been a member of this Co-op and other cooperatives for most of my life, and I never anticipated before coming to work here how much additional effort and work goes into having an organization be a cooperative. Whether a business is family-owned, or privately held, or publicly traded, there is work with all those structures. But there’s a lot of effort that goes into the organization of an entity as a co-op and its continued existence as a co-op, whether that’s arranging for an annual meeting, for member surveys, arranging for votes, for capital credits—that’s probably the largest—and Rural Utility Service compliance, construction work plans, construction work loans—there’s a lot that goes into being organized as a co-op.
That goes into the benefits of a co-op: being democratically run, transparently run, returning margins to members. I would rather answer to and return money to my community members than multinational corporate investors. I would not say it’s any less work to be organized as a co-op than to be a publicly traded entity. There’s a lot of work and compliance and I think it’s worth it, but it is also worth recognizing there are a lot of people at Washington Electric who do a tremendous amount of work to make it work as a co-op.
Steve: As another comment on cooperatives, I’ll point out that regulation of utilities is generally necessary to prevent predatory pricing and unnecessary costs imposed by for-profit utilities on their ratepayers. But the board of a member-owned co-op is going to act in the best long-term financial interest of the members who elect them in these positions of leadership, so regulation of cooperatives is not as necessary. Of course, cooperatives, like all utilities, must and should adhere to performance, reliability, and environmental standards set by regulators. But for financial management, co-ops aren’t regulated by their respective legislatures and public utility commissions in many states to the extent investor-owned utilities are. While that is not true in Vermont’s case, the cooperative model generally affords member-owned organizations more leeway in guiding their future for the benefit of their members.
That’s simply what it boils down to for me: under any regulatory framework a cooperative should strive to do what’s best for members and as many members as possible as long as it’s in existence.