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[Rep. Kathleen James (Chair)]: We're live. Alright. Welcome everybody to House Energy and Digital Infrastructure. It's Wednesday, January 21, and we are, in the first couple weeks of the session just checking in with all of our utilities to get an update and see how they're doing. So we're here today with two of our co ops. We'll just go around the table and introduce ourselves and then turn it over to you. So I'm rep Kathleen James from the Bennington Ford District.
[Rep. R. Scott Campbell (Vice Chair)]: Scott Campbell from Saint John's Ferry. Richard Bailey, Lamoille two. Chris Morrow, Windham, Windsor, Bennington. Michael Southworth, Caledonia two.
[Rep. Christopher Howland (Member)]: Christopher Howland, Rutland Four. Dara Torre, Washington two.
[Rep. Bram Kleppner (Member)]: Okay. Bram Kleppner, Chittenden Thirteen, Burlington. Laura Sibilia,
[Rep. Kathleen James (Chair)]: Great. And in the room. Charlotte Mae, legislative in China. Great.
[Rep. Bram Kleppner (Member)]: Dana Lee Perry, the Crassie Group.
[Rep. Christopher Howland (Member)]: Andrea Cohen from Mon Electric Cooperative. From Mon Electric
[Rep. Bram Kleppner (Member)]: Electric Cooperative.
[Rep. Kathleen James (Chair)]: Gabriel Bueno with Downs Rockland Martin and I took the Mon Electric and Electric. Alrighty. For the record deck.
[Louis Porter (General Manager, Washington Electric Cooperative)]: Good morning. Lewis Porter, general manager of Washington Electric Cooperative. Sorry to be presumptuous and sit down before we started here, but I wanted to make sure I could get the technology to work.
[Rep. Kathleen James (Chair)]: Yeah. No. That's so
[Louis Porter (General Manager, Washington Electric Cooperative)]: problem for me. Yeah. Thank you for having me, and happy to to see you all. A couple of you are are members, so thank you for being for being Washington Electric Co op members. Not that you have a choice in a regulated distribution utility territory, but we're still glad that you are. I'm just gonna go through a couple of slides, and mostly would like to have a conversation about Washington Electric, where we stand right now, and and our long term position, our long term challenges that we face, and and how we're trying to address them. So please interrupt me if you have questions or you wanna talk about anything or you don't understand something, and and happy to have a discussion about anything. And if I don't have answers for you, will get back to you with some. We had an extraordinarily good year in 2025, one of the best years the co ops experienced maybe ever in its eighty five, eighty six year history. We had no major storms, which just stands in stark contrast to recent years, and we've had typically had at least one storm that cost over $1,000,000 apiece to do power restoration, and that was especially welcomed when we are uncertain about FEMA reimbursements. Absolutely. We are very grateful and rely to a large extent on FEMA reimbursements for major storms that meet meet the category, and we as as other public entities are are are very nervous about future of FEMA reimbursements and whether we're gonna be able to count on those or not. We also had a cold and snowy start to the year. Washington Electric has a very, very high penetration of net metering. And for net metering members, they don't they don't pay the cost of their electricity because they're producing their own. They also don't pay the cost of providing them electrical service. So those first couple of months in the year in which we had relatively high usage and low net metering helped us out. We also had near or above record production at our Coventry Landfill gas to energy plant that takes the methane from the Coventry Landfill and produces electricity from it and covers 65% plus of the electricity that our members use, and it's very valuable to us. It was it was a gamble when we built it in '20 in 2005, and it's very valuable to us both because the price of that power once RECs are sold is very reasonable and also because it's not only renewable, but it's twenty four seven power based on renewable power, which is quite rare and quite valuable, quite important when you have an increasing share of the grid supply coming from intermittent sources. Over the last decade or more, we've had clean audits from our auditors. We have had a few adjustments in those following those audits of late invoices that have came come in after the end of the year, minor mistakes in terms of where accounting where we had put accounted for funds, but no no significant findings on our audits going back a decade or more. And Washington Electric is not bond rated because we we borrow our the money that we borrow, we borrow primarily from the rural utility service from the federal government. So instead of bond rating, we have to meet lender metrics. Basically, they look at the health of our revenue versus our expenses and our interest that we have to pay on debt, And that's sort of the federal government's version of a bond rating. And we have met those metrics in recent years consistently. We are in the fortunate place because of Coventry, we tend to be on a little bit of a different cycle in terms of rate cases than than our than our sibling utilities. But we have no rate increase planned for '20 for '26 and are hoping to avoid a rate case in '27, although it's possible we'll have a a minor one. So that is in part due to the fact that we've been able to defer over a little over $1,000,000 in revenue from 2025 into 2026 for those reasons that I talked about before. Basically, what that means is we had enough we had more than enough margin to meet our accounting metrics, our lender covenants from the federal government, and that allowed us to to count some of that revenue in the in this year instead of in last year, which will help us avoid avoid a rate case.
[Rep. Kathleen James (Chair)]: Rutland?
[Rep. Bram Kleppner (Member)]: Million dollars coincidentally matches what it cost now to recover from a big storm. Is the fact you didn't have any storms last year? What gave you that million to move forward?
[Louis Porter (General Manager, Washington Electric Cooperative)]: It's a it's a big it's a large part of it. That million dollar to recover from a big storm, a lot of that is paid back typically by FEMA. So it's not a direct one to one comparison because, you know, 65, 70% of those large storms are often paid back to us from FEMA. So Yeah. So it's not a direct one to one, but certainly that that was a factor of our our net metering production our net metering lower production and the high country production.
[Rep. Bram Kleppner (Member)]: Thank you.
[Rep. Kathleen James (Chair)]: I just have a quick logistical thing. Alex, can you click off the button that says this meeting is being live streamed? Thanks.
[Rep. Christopher Howland (Member)]: Rob, Rutland. Couple of
[Rep. R. Scott Campbell (Vice Chair)]: small questions. Can you repeat what you said about net metering at the beginning? Sure. I I didn't understand the dynamics.
[Louis Porter (General Manager, Washington Electric Cooperative)]: Yeah. So we have like most utilities in Vermont, we have a customer charge, and then we charge for the electricity that people use. The electricity charge includes not just the cost of us providing of us purchasing that electricity or, in our case, making that electricity. It also includes some of the costs for distributing that electricity for paying for line line crews and, you know, me and and trucks and all the other things we pay for. So when members offset their the electric portion of their bill, they are avoiding some costs of providing them service even though we of course, we have to provide them services. We do others. Mhmm. So we estimate there's a little bit less than a million dollar a year cost shift from net metering members to non net metering members. How much? About a million dollars. It's about 900,000 annually. And that's after the net metering power has value to us and value to the other members. And it has more value than just the raw kilowatt hours produced because you can avoid transmission costs and other costs. But even after all that's taken into account, we estimate it's a little bit less than a million dollar cost share.
[Rebecca Towne (CEO, Vermont Electric Cooperative)]: Rutland? It so, Lewis, I
[Rep. Christopher Howland (Member)]: just wanna make sure I understand that this that's a higher proportionally, that's higher than most of the utilities. Yeah. I I That shift.
[Louis Porter (General Manager, Washington Electric Cooperative)]: I think Hardwick, maybe maybe close to us in terms of net metering penetration. The combination for us that's that's challenging is we have a high about 10% of our members net meter, and we have a very highly rural and residential territory. So those two things combined put a put a bit
[Rep. Bram Kleppner (Member)]: of a squeeze last time.
[Rebecca Towne (CEO, Vermont Electric Cooperative)]: You are talking about line hardening?
[Louis Porter (General Manager, Washington Electric Cooperative)]: Yes. I've I've gotten it yet.
[Rebecca Towne (CEO, Vermont Electric Cooperative)]: Okay. Yep. Well, I'll hold
[Louis Porter (General Manager, Washington Electric Cooperative)]: my Sorry. So that nice segue into my next point, which is we've done a lot of in our in the midst of doing a lot of construction in our in our territory. We have about $11,000,000 construction work plan with the Rural Utilities Service, which is our federal lenders over the next four years. In addition to that, we have a FEMA mitigation project, which we're just wrapping up now. This is separate from the money that FEMA gives us to pay back for storm damage. It's money they give up they they provide to public entities to to offset the cost of projects that will lower outages in the future. So we got about just under $600,000 from them for that for a project in East Montclair, which we're wrapping up. And our our work in that area is a combination of replacing lines that exist now with with standard construction, replacing lines with cable spacer construction, Hendrix construction, which is basically those if you if you're driving down and and GMP builds this way a lot, we we these two projects are our first foray into this construction. But if you see that tight diamond shaped electrical lines where you have a messenger, a wire across the top that's not energized, and you have the three phases and the other corners of the bracket, that's a Hendrix or a line spacer construction. These two projects in Greensboro and East Mount Plea are our first foray into that type of constructing. The advantages are it's tighter, and less spread out than a typical cross arm construction, so less likely to be hit by trees. And probably even more important, it has that messenger wire at the top that can deflect trees that hit it, hit the wire and maybe protect the wires underneath from getting hit. Same reason that the telephone lines go out less often than the electrical lines because the electrical lines shield them from above. So this is new for us. We're we're trying it out. The downside is it can be more difficult to work on, and so we're trying it out on these two projects and and seeing how it goes. We also underground a fair amount of our of our work, particularly new line extensions and and feeders second secondary lines from the last pole to the houses we underground at the request of members fairly often and anticipate doing more undergrounding.
[Rep. Christopher Howland (Member)]: Is that so the undergrounding, are you charging members for that? When it's in line when it's
[Louis Porter (General Manager, Washington Electric Cooperative)]: a new line extension, we charge the member. And if it's us undergrounding it as part of one of these grant funded projects, we would not.
[Rep. Kathleen James (Chair)]: Yep. Couple more. We're at Southworth, Brad Bailey.
[Rep. Michael "Mike" Southworth (Member)]: So when you do the underground from the hole in the house, used to be that the owner would be the responsible party for the repairs and maintenance of that. Still is. Still is. Yep. Okay.
[Louis Porter (General Manager, Washington Electric Cooperative)]: We'll build it and charge them, but they're but unlike an overhead service, it's on them to repair it. And and sometimes we we we we work hard to try to educate members about that because some sometimes they they're surprised and upset to find that out because they know, you know, in a typical aerial overhead line, it's it's on us. And it's kind of a it's kind of a strange thing because it's our responsibility up to the pole, and then it's theirs underground, and then our meter is our responsibility, and then past the meter is there. So it's it's kind of a it's a little bit different than a than a typical aerial service.
[Rep. Christopher Howland (Member)]: Thank you.
[Unidentified Committee Member]: Could you just back up again and just give me a little overview? I think you probably told us this last year of the how the your Coventry plant works. Do you own it completely? And what is your what's the price that you're getting out of that?
[Louis Porter (General Manager, Washington Electric Cooperative)]: Sure. Yeah. We own it completely. There's five big Caterpillar engines that take the takes the methane, burn it, and they they spin and spin generators. Mhmm. We own it through a subsidiary called Coventry Clean Energy Corp, but it's wholly owned by us. And we have a long term contract for the gas with Casella. And what was your second question?
[Rep. R. Scott Campbell (Vice Chair)]: Oh, the cost. Your cost.
[Louis Porter (General Manager, Washington Electric Cooperative)]: It it it varies a little bit depending on what kind of work we're going doing there, how much power it produces, how often it's down for maintenance, what kind of gas supply we're getting. But rough terms, four to six and a half, seven cents. So very competitive. Very competitive. And that is in large part, we we were I believe that was the first landfill gas to energy plant in in New England. It was a bit of
[Rep. R. Scott Campbell (Vice Chair)]: a bit of a bit of a experimental bit
[Louis Porter (General Manager, Washington Electric Cooperative)]: of a trial run by us and Casella together. And so we got a very good price on the gas, which at that point had been just a waste product. So very, very good deal for our members. Of course, to have 65 to 70% of your power supply in one basket is always makes you a little bit nervous.
[Rep. Bram Kleppner (Member)]: Yep. Good. Yeah.
[Unidentified Committee Member]: Good. Just wanted now methane is pretty corrosive. So how often
[Rep. R. Scott Campbell (Vice Chair)]: are are you will you be rotating out those generators? The engines get rebuilt
[Louis Porter (General Manager, Washington Electric Cooperative)]: fairly regularly. There's kind of two levels of rebuild. One that the the operators do in house, and that one's fairly frequent. Complete replacement of a of an engine is fairly rare, but the gas is cleaned quite significantly before it gets into the engine. We did just replace all of the gas piping that brings the gas into the plant starting about two or two and half years ago or so, and we did that project. That was don't hold me to the amount, but that was several $100,000 project. Because as you say, the gas is corrosive, and those used to be cast iron cast iron pipes. We replaced them all as stainless to try to get longer term life out of them,
[Rep. R. Scott Campbell (Vice Chair)]: but it it's it's corrosive stuff. Yep. Thank you. Yeah. Long term contract with Casella, or is that coming up to where prices could change?
[Louis Porter (General Manager, Washington Electric Cooperative)]: It ends in 2036 or 2038, I think 2038, which is a challenge one of one of the challenges that I'll get into in a minute is we have a lot of long term contracts that all come due in the 2030s as other utilities in the state do. But that's something we're looking forward to we're looking forward to at now.
[Rep. Christopher Howland (Member)]: Real quick.
[Rep. Bram Kleppner (Member)]: You have to clean the gas quite a bit coming out of the landfill, which is not the least bit surprising. How clean is it when it goes into the generators?
[Louis Porter (General Manager, Washington Electric Cooperative)]: Well, it's hard to I it's hard to say exactly. So we we remove siloxanes. We remove water, and and that's the that's in order to make them burning efficient and also protect the machines. It's not natural gas. It's not it's not, you know, it's not pure like natural gas. There's still there's still contaminants and and and well, I don't know if I should say contaminants. It's still a mix of things that you would not burn in a natural gas and burning engine. Yeah.
[Rep. Christopher Howland (Member)]: I don't know what order Yeah. Christopher's Okay. Total capacity of Eight megawatts. Eight megawatts. Yeah. And twenty four seven baseload. And a capacity factor of 98, 90
[Louis Porter (General Manager, Washington Electric Cooperative)]: Very, very high. I don't know if it's 98 because we have we do have maintenance shutdowns. The capacity factor in the 97.
[Rep. Christopher Howland (Member)]: So the maintenance the maintenance between the five engines rotates, four are running most of the time. Yeah. Correct. So capacity factor is a percentage of overall capacity on all the hours in a year.
[Louis Porter (General Manager, Washington Electric Cooperative)]: We we also throttle the engines back if there's a higher levels of oxygen in the gas to to protect them, so we're not always operating at full capacity in order to protect the engines from damage.
[Rep. R. Scott Campbell (Vice Chair)]: Okay. Yeah. And I I was just wondering. So you so you're you're paying Casela for this contract, and they probably can't disclose how much. But Okay. But I guess, I'm I'm I'm wondering. I don't know. Maybe you can you talk talk any more about how that works? Sure.
[Louis Porter (General Manager, Washington Electric Cooperative)]: I mean, we pay them based on on the volume of gas we use on the production. Uh-huh. And they've been very good partners with us. Our our operating is is hand in glove with them with their operation. You had
[Rep. R. Scott Campbell (Vice Chair)]: to install the pipes and everything and all that stuff at at at at in in one sentence, how do you do that? You just drill a hole in the
[Louis Porter (General Manager, Washington Electric Cooperative)]: Well, they do all the well field maintenance and operations. Okay. They they oversee everything up to when it goes into the pipe coming into our coming to our pipe. Oh, I see.
[Rep. R. Scott Campbell (Vice Chair)]: Okay. So you get that.
[Louis Porter (General Manager, Washington Electric Cooperative)]: Which they would do which they would need to do anyway in order to to flare the gas and to to seal all that in any case. Yeah. Okay.
[Rep. Kathleen James (Chair)]: Rip Sibilia, let move forward. Perfect.
[Rep. Christopher Howland (Member)]: Lewis, what are you seeing for for projecting for load growth? Seeing and projecting, actually.
[Louis Porter (General Manager, Washington Electric Cooperative)]: Yep. So we're our Itron load growth forecast is roughly 3% a year projected, which is pretty significant. We we've gone we went ten years or more without load growth, and so this is a change for us. So we're we're looking at about 3% a year load growth. The change in tax incentives on on electric vehicles and chargers and things may have an impact on that. But that's that's basically what
[Rebecca Towne (CEO, Vermont Electric Cooperative)]: we're So it's basically the
[Rep. Christopher Howland (Member)]: load growth is basically an electrification, not new?
[Louis Porter (General Manager, Washington Electric Cooperative)]: It's both. I mean, we had we had a 116 line extension applications last year. So it's both it's both line extensions, new new services, and also electrification. I would say electrification is probably leading in terms of in terms of blood growth.
[Rep. Kathleen James (Chair)]: Repertory, and then I mindful of the time.
[Rep. R. Scott Campbell (Vice Chair)]: Sure.
[Rep. Christopher Howland (Member)]: Sure. Just a quick comment that we had a great field trip to Coventry, the environment in Angelina, and I recommended. But and then a question. So you mentioned electrification. How has that affected retail sales? Are you starting to get some of the benefits?
[Louis Porter (General Manager, Washington Electric Cooperative)]: Mhmm. Yep. We are. And and, you know, when you we have never and and I'm I'm proud of the fact that Washington Electric has never has worked hard to reduce its retail sales. We we've spent many, many years, decades now working on efficiency. Our reach residential members use less energy than the average in the state, even though we have a lot of single family homes and a lot of older housing stock. That's partly due to our efficiency effort. So we we worked hard in in a way that a that company that was not a co op and not a nonprofit wouldn't be able to do because we're not dependent on on sales. However, when you see when when you sell a a a and you sell more of it using largely the same systems, you you can spread that overhead. Now, it's not a pure gain because substations need to be upgraded, lines need to be upgraded, transformers need to be upgraded. We've replaced 324 transformers in the last year, which is a tremendous number for us. And so, you know, that's not all it's not all just just benefit, but there's a cost there too. Great. I will I go on to the next slide, but just let me know when you're when you need me to to make way.
[Rep. Kathleen James (Chair)]: Okay. Well, we've got I mean, by a little bit after 09:30, we should probably swap out seats because we have our next conversation starting at ten, and I wanna give everybody a five minute break.
[Louis Porter (General Manager, Washington Electric Cooperative)]: Rebecca's a lot more interesting than I am, so sleep safe on your tongue. We had a great year, but the underlying challenges for us that have always existed remain. The most basic one is that, you know, our territory exists. Washington Electric exists because our territory wasn't profitable to serve. And '86, eighty seven years ago, a bunch of folks, mostly farmers and George Aiken got together to create the utility because it wasn't served by the for profit utilities in our that that serve our territory. So our our our our our shorthand, our joke is if you're in our territory and you're on a paved road, the power line next to you is probably Green Mountain Power. And if you're on a dirt road or it's in the middle of a field, it's probably ours. We have about 1,300 miles of line, about enough to go to the state of Georgia. 40% of that's off road, and we have 12 members of our line crew. So, you know, they each take a 100 miles. We're in good shape. The I've mentioned the net metering penetration we have already. Not surprising given an industry that is becoming more complicated and is in flux, the regulatory requirements are increasing, which places a challenge on on a small entity such as ours that is obligated to meet all of the same regulatory obligations that all the utilities are, but with a smaller customer base. We have about 1.3 of total state electric load.
[Rep. R. Scott Campbell (Vice Chair)]: Do you guys create a virtual power plant and put batteries in these homes to We we are just going into that territory now, and I'll get to that
[Louis Porter (General Manager, Washington Electric Cooperative)]: in a second in the next slide. We're just going into that into that world now. And and last, member expectations are growing. Members are are expecting more from their electric utilities. The members own Washington Electric, so that's their right to accept more, and we need to meet that. But it does mean that it's a very different business than it was ten years ago. I'm frankly constantly amazed that it works as well as it does because the entire system was built to go one direction. You know, have big power plants and then go one direction out to people. And now it's going both directions, constantly switching during the day. And it works very well given that that's not how it was designed. I always think about the highway system. And if you had all the lanes and all the highways changing direction a few times a day. Mhmm. Fortunately, the electricity is a little easier to manage than people, but but it's it's amazing. It's usually. But it's it's amazing to me that it does work as well as it does.
[Rep. Kathleen James (Chair)]: We're failing.
[Unidentified Committee Member]: Do you do you have ski area in in Traste down Northbound, Traste in it?
[Louis Porter (General Manager, Washington Electric Cooperative)]: Nope. We don't. The we don't have any we have very few. We have a few farms. We have a couple of schools, and that's basically our commercial and industrial load. We're over 95% residential. So our plan going forward is to rely on what has worked for us and continue with our tradition of being nonprofit member owned cooperative that's run by elected board members who are elected just as you all are, except from a smaller constituency, and continue to provide a 100% renewable power. We are one of three in the state that do that now, and and we have already met the res standard in that fashion, although there are res requirements that we are gonna need to meet in terms of our load growth as well. As I mentioned, we're looking to the twenty thirties when our long term contracts for many of our long term contracts for power supply expire. And I think our, you know, our biggest asset is that we have a bunch of people working at Washington Electric who live in and near these communities and are devoted to them. So much so that they're willing to work for a utility that requires a lot more climbing of poles than a utility that have more of its lines next to the road. And that's big ask for people because, you know, they they get paid well, but they work incredibly hard for to to do what they do and keep the power on. Our partnerships are very essential to us as a small entity, and probably most important among those is our partnership with Vermont Electric Co op. When I came into the job at Washington Electric, almost our entire leadership team had had departed. Within a few months, we were a million dollars in the rent due to power supply. We did almost all of our work on paper and not digitally. We had just started doing working on energized power lines. So we we and we had not embarked on a lot of the more innovative programs, and we relied a tremendous amount on Lamoille Ecuador to help us, and they did. I'm proud to say that we're now in a position where I think we can make that partnership more one of equals and mutual benefit, so we're looking forward to doing that. But those partnerships with the federal government through RUS and FEMA, with VEC, with Velco, which now has fiber optic communication at all of our substations, and with our federal and state granting partners are very vital to us. I should have put down here, as GMP is as well, GMP supplies most of our substations from their transmission system. So our plan going forward. We are embarking on a home battery and load management program, trying to catch up to Vermont Electric Co op and their work there, and we're starting that this year. It's kind of a pie grant funded pilot project at first, but will be expanded, and it's basically a bring your own battery system where we will provide a benefit to members who agree to allow us to manage their battery to mutual benefit of of themselves and the rest of the membership. We are also expanding our EV charger program, which is is similar. We our our kind of philosophy is 50%. 50% to the member who has the electric vehicle or the battery, 50% benefit to the rest of the membership. It doesn't always work out perfectly that way because it's very hard to perfectly align those incentives, but that's our goal is to split the split the benefits. We are gonna, as I say, remain a 100% renewable. We need to address how tier five and the new res is gonna affect us. Basically, we need to meet our load growth through new renewables that are deliverable within the ISO New England system with the faltering of offshore wind that's likely to be more difficult and more expensive, but but we will meet that obligation. We are also planning on building a utility scale battery at one of our substations this year, probably operational in 2027. Basically, that will be to avoid transmission and peak costs. So we'll we'll discharge that battery or rather our our our partner or our vendor will discharge that battery at peak times and and reduce our load by that share of that battery. And we're hoping that, like, as I said, we're gonna do that this year and have that operational, we hope, in 2027.
[Rep. R. Scott Campbell (Vice Chair)]: Who who are you working with on that?
[Louis Porter (General Manager, Washington Electric Cooperative)]: We don't have a we haven't signed with a contract yet. We have an RFP out, and we have about half a dozen or seven different potential vendors. Fortunately, we have somebody who works with us now who has a lot of experience in this area because it's way more complicated than I can understand between the various contract types and the vendors and the batteries. I if I can understand, but, fortunately, we have somebody who've done this for the natural electric co op and has a
[Rep. R. Scott Campbell (Vice Chair)]: lot of experience with those.
[Rep. Kathleen James (Chair)]: Yeah. Just
[Unidentified Committee Member]: to back just to back up just quickly. How was the supply to get your trains It's a 320 boards. You have any issues? Or do you have a long term?
[Louis Porter (General Manager, Washington Electric Cooperative)]: Two years ago, we were having tremendous issues at getting one. Two two and a half years ago. We had a lot of issues. Now we're pretty good, and we we did what a lot of people did during that period. We started looking everywhere. So we entered into contracts with transformers of various companies. A lot of those contracts came came in at the same time, so we're pretty well stocked now, and we have a good good supply going forward. Pad mount transformers can still be difficult to find. Generally, the ones on the poles
[Rep. R. Scott Campbell (Vice Chair)]: are are are are fairly fairly
[Louis Porter (General Manager, Washington Electric Cooperative)]: achieved. Alright. Thank you. Another one of our goals, and I I'm I will finish up on this, another of our goals is to improve our outage response. We have a million dollar right of way clearing budget. We're gonna increase that to 1,500,000.0 this year. We're using digital technology and tools in the field and in the office to a much greater extent than we used to. I sort of expected the line crew folks to to I won't say resist, but but have to work into using those, and they've taken to them very well. I'm very grateful and and and encouraged by that. They and and you can having a iPad in the field that tells you what lines are energized and what aren't, what's going on in the system is obviously very helpful and important to you when you're out there, both for operational efficiency, but also for safety. And we are working on doing greater and more thorough outage communications with our members and expect to deploy AMI meters over the next several years, which will give us a lot more data about what's going on at the meters, a lot more efficient outage response we anticipate, and a lot more ability to serve members with different rates, different opportunities that will benefit them as well. So happy to answer any other questions I can.
[Rep. Kathleen James (Chair)]: I just have one. Just going back to governance and financial transparency. So you have an electric elected board. And is it the board that takes a look at your budget and reviews your audits? And so it's basically the board is responsible for making sure that you your finances are looking strong and looking good and pushing back if they have questions.
[Louis Porter (General Manager, Washington Electric Cooperative)]: Yeah. We have multiple levels of oversight in on our financials. The board is the the most active and the most in the leads of that. I mean, they meet they meet every month. We have a finance committee that reviews the budgets and any loans we're gonna take out or anything like that. And the the and so the the finances are fully transparent to the board. But then we also have auditors, independent auditors that come in every year to look at our books. We also have the federal government because we're an RUS borrower. The the federal government is very very into and very knowledgeable about our financial condition and financial decisions, financial health, and they are absolutely a dream to work with. I can't say enough good things about the RUS. They're just they're responsive. They're helpful. They're generous. They're they're great. But they are another layer of protection. And then, of course, we have the Department of Public Service and the Public Utility Commission, which has various insight in the in the both short term and long term prospectively and backward looking into our finances. Right. So we got quite a few layers.
[Rep. Kathleen James (Chair)]: Alright. One quick question and then we need to stop that.
[Rep. R. Scott Campbell (Vice Chair)]: Yeah. Just following up on that. Is there is there any kind of rating of financial health for utilities like like your saw?
[Louis Porter (General Manager, Washington Electric Cooperative)]: Yeah. We we don't get bond rated, but we do we are rated by the RUS on what's called tier times interest earn rate earn ratio, and there are several other lender metrics that we get rated on. We we borrow primarily from RUS. We also borrow from CFC, which is a nonprofit bank that exists to serve electric co ops. So they have their own rating system that we're evaluated on as well. And we are we are meeting those metrics. We typically, those metrics are our best two out of three years, but we've in recent years, we've meeting them every year. And anything that any excess revenue that we bring in, we repay to members in the form of capital credits. Now to to our members' dismay, sometimes that takes a long time. It's twenty years before we pay you back because of the long term nature of the investments and the importance of fiscal health in in the you know, an essential business like ours. You know, it's not as rapid as our members would like to get paid back, but we have paid back a million dollars since '19 I mean, $10,000,000 since 1998.
[Rep. R. Scott Campbell (Vice Chair)]: But as far as the rating, is there a one two five or something like that?
[Louis Porter (General Manager, Washington Electric Cooperative)]: Yeah. Well, basically, you have to meet a 1.25 tier in order to qualify for RUS borrowing. And so we we meet or exceed that. And so what what what you are saying? There's not a there's not a there's not a rating system like a plus, like, you know, a minus, a, b, like like there's in a in a in a yeah, in a in a in a bond rating system. It's just you either meet it or you don't.
[Rep. R. Scott Campbell (Vice Chair)]: I see. Okay. Yeah.
[Rep. Christopher Howland (Member)]: Alright. Thank you so much for your time. Thank you. Appreciate it. Thank you.
[Rep. Kathleen James (Chair)]: Rebecca, do you have slides to share? I do. Great. One second to get set up. Okay.
[Rebecca Towne (CEO, Vermont Electric Cooperative)]: Good morning. Rebecca Town, CEO of Vermont Electric Cooperative. I've been in that role for seven years and before that spent time at Vermont Gas and Green Mountain Power. So I've been in the Vermont utility space for a lot of years. And I focus this presentation primarily on financial and governance metrics, but I really appreciated how your questions have been all over the map. I'm hoping that that will continue because I'd love to chat
[Rep. Kathleen James (Chair)]: about them.
[Rebecca Towne (CEO, Vermont Electric Cooperative)]: So, you have these slides. This is just our vision and our mission. You'll notice since we started, our mission has been safe, affordable, reliable. We recently changed that to also include sustainable as part of
[Louis Porter (General Manager, Washington Electric Cooperative)]: our
[Rebecca Towne (CEO, Vermont Electric Cooperative)]: mission and really have focused more, I would say, over the last seven years on clean energy and what that looks like to our membership and in our power supply portfolio. Similar to what Lewis shared, we were established in 1938. We started in Eden. My my farm family is actually my I grew up in Cambridge in a farm family, and my grandfather would tell stories about helping set the poles, and what were then fields are now woods, which is one of the reasons we have such a big vegetation management budget. But a long history and, you know, over the hills and dales to those rural areas that had not yet received electricity at that point. These are some of our critical metrics. So, a couple of things that I want to point out here. Vermont Electric Co op, we are we from a load perspective, about 8% of Vermont, that puts us as the second largest utility in the state. So, that's our load. So you'll that load is about 8% ish. Our peak load's 86 megawatts, but what is interesting about that is that we have been, for a long time, a winter peaking system. We were still in the past year, but you'll see August came close, and that is being driven by two things. One is the changing weather. Summers are hotter. Winters are a little warmer. And also, Vermonters, as they acquire heat pumps for heating, are discovering air conditioning. And so that is really both delighting people and also changing the load profiles in the summer, which has been interesting. So we expect that we will start to be a summer peaking at some point in time. And interestingly, ISO New England is looking they are now summer peaking. They are expecting over the next ten years or so to move to a winter peaking system. So we'll see if we flip flop or stay the same, but that does impact some of our costs because the lower our load is at ISO New England peak times, the lesser percentage of those costs are. So we watch that very closely. We are about 50% residential, so we do have two ski areas. We have Smuggler's Notch and JPeak. Our largest commercial customer is WestRock, which is a box board manufacturer in Sheldon, and then the rest are just lots of small commercial thing, grocery stores or things like that. And while we are we do not we're a nonprofit, so we do not pay tax on our income. We do pay property tax, which runs about $4,000,000 a year for our state states. And that is distributed between among 75 towns. I want to just hit on this quickly, I think, to just give a sense of what our costs look like. So between purchase power and transmission costs, so effectively just getting the electricity onto our system is about 60% of our costs. And then the rest, you'll see labor is next. And then all a lot of costs around distribution, things like running the control center and things like that and vegetation management. So this is generally how a lot of this shows up. So when we even when our load increases, 60% of that is going right back out the door to just pay for the acquisition cost of whatever that power is to serve.
[Rep. R. Scott Campbell (Vice Chair)]: So is that transmission is that just going to Velco, or is that the other
[Rebecca Towne (CEO, Vermont Electric Cooperative)]: It is a combination of Velco and ISO New England and some of our own internal costs for managing some of the sub transmission that we have. Mostly ISO and ISO New England and Belco.
[Rep. R. Scott Campbell (Vice Chair)]: Based on on Megawatts or
[Rebecca Towne (CEO, Vermont Electric Cooperative)]: Yes. Based on load at the time of peak, either the monthly Vermont peak or the annual New England peak. We every co op, whether you're an electric co op or or a food co op, we subscribe to the seven cooperative principles, which is one of the things I actually really enjoy about being part of a cooperative. So it's open membership, your board is always elected. There's a couple of things that I want to highlight here. One is the last one, concern for community. So it is based into the values of who we are as a co op, that we are connected to our community. Also, Lewis mentioned cooperation among cooperatives. We have an incredibly robust and incredibly helpful cooperative community, both in Vermont and the Northeast and then nationally. And then finally, the commitment to education, training and information. We spend a lot of time with our board and with our membership on education, and that is a goes into who we are as an organization.
[Rep. Christopher Howland (Member)]: Yeah. On
[Unidentified Committee Member]: the property tax issue, did your property tax drop after the reevaluation of all the whatever that is,
[Rep. R. Scott Campbell (Vice Chair)]: one forty one or one '42?
[Rebecca Towne (CEO, Vermont Electric Cooperative)]: Yeah. It was interesting. So first they went way up, and then they went back down. It went with when everything was readjusted, ours went down a little bit, partially because there was more waiting on the it was less about how many miles of line. We have a lot of miles of line. And more about revenue that was generated percentage of sales in that town. Then also what assets you have in that town, substations and larger equipment. And again, we have more miles, but less of some of those other things. So it changed for us.
[Louis Porter (General Manager, Washington Electric Cooperative)]: Thank you. I
[Rebecca Towne (CEO, Vermont Electric Cooperative)]: would just add, we are deeply appreciative So and consistent every year it used to be whatever the towns would decide was their plan. And then we would just have to receive that. And now that there is an evaluate evaluation, it stays consistent, and we can anticipate that better to incorporate into our rates.
[Rep. R. Scott Campbell (Vice Chair)]: So this question kinda goes to both co ops. With that reduction in property tax, did you show that in savings to your rate makers or not?
[Rebecca Towne (CEO, Vermont Electric Cooperative)]: Everything goes into rates where I'm not for profit, and so it's all of our costs and savings, everything goes into that same rate making device. So absolutely, it shows up into what would otherwise be our rates. Yes.
[Louis Porter (General Manager, Washington Electric Cooperative)]: And if I could just respond to the Lewis Boyer, Washington Electric. That's part of the money that we're able to defer from last year into this year avoiding a rate case because we booked we we budgeted for higher property taxes than we ended up paying in 2025. So we were able to say take some of that savings and put it into this year's revenue instead and avoid a rate case that might be. Thank you. Yeah.
[Rep. Kathleen James (Chair)]: Was that
[Rep. Christopher Howland (Member)]: tax both municipal and education tax paid on utilities?
[Louis Porter (General Manager, Washington Electric Cooperative)]: That's a
[Rep. Christopher Howland (Member)]: great question. That's a great question. I
[Louis Porter (General Manager, Washington Electric Cooperative)]: believe so, but it's not it's not like a homestead tax. So it's it's
[Rep. R. Scott Campbell (Vice Chair)]: No. Yeah.
[Rep. Christopher Howland (Member)]: Yeah. That's how that yes. That is the answer is yes or maybe.
[Louis Porter (General Manager, Washington Electric Cooperative)]: I can find out for you. But I
[Rebecca Towne (CEO, Vermont Electric Cooperative)]: At $4,000,000, I can't imagine some of that's not going to education. Just Well, it's valuable plan. Right. But I'm, you know, just knowing what percentage education taxes the town taxes usually is. But I don't
[Rep. Christopher Howland (Member)]: I'm sorry. I get I get skewed because it's municipal rates in the city and around the town.
[Rebecca Towne (CEO, Vermont Electric Cooperative)]: We have a 12 member elected board of directors, and they are elected by district and zones for us so that they represent the different areas of our constituency. And as you can imagine, some of our members' perspectives from the Northeast Kingdom vary from what we see from the Champlain Islands, for example. And so that creates some really good member representation in the boardroom and helps us cover all of that. This shows us as covering all of that area. I will just note there are a lot of carve outs for municipalities and other areas, but we do cover to the New York border, the Canadian border, and to the extra boarding. Wanted to just hit a little on director responsibilities around fiduciary responsibility. So we do have monthly board meetings. We have a board finance committee, which is chaired by our board treasurer. We also have an external audit similar to Washington Electric Co op that is conducted every year and reports directly to the board of directors, and that is also reported out. Our financials and the results of the audit are reported out to our membership at the annual meeting every year. I mentioned also that we have an education requirement. We spend a lot of time educating our directors so that they understand how an electric company works, how a cooperative works, and how our financials work. So that starts with a day long orientation when they began, and then every year there are I would say about 50% of our board meetings are educational. And then there's also a minimum of two full day education sessions. And there's also conferences. So they get a lot of financial education throughout that process, even those not on the finance committee.
[Rep. Kathleen James (Chair)]: Is that the annual meeting?
[Rebecca Towne (CEO, Vermont Electric Cooperative)]: That is our annual meeting. That's at
[Rep. Christopher Howland (Member)]: JPEG. Like,
[Rep. Kathleen James (Chair)]: more people than came to our town meeting this year. We get Free breakfast.
[Rebecca Towne (CEO, Vermont Electric Cooperative)]: 100 to 300. Do we joke about Yeah. The
[Rep. Bram Kleppner (Member)]: That's
[Rebecca Towne (CEO, Vermont Electric Cooperative)]: great. Yeah. It's great. And we alternate between JPEG and Smuggler's Notch so that we can cover two two parts of our service territory. We do have a rating. We issue bonds and we also participate as a market participant in Mesa, New England and have power supply contracts. For both of those reasons, we participate in S and P Global's rating system. Since I have been at the Co op for seven years, we have had an A plus rating with a stable outlook, which we're very proud of. And they look at that, I would say, a formal way every three years, where we send a lot of financial information back and forth. We also send them quarterly financial reports and they ping us anytime something interesting happens like tariffs or they see something in our financials that they have questions about. But overall, this has helped us have pretty favorable terms in our power supply contracts and not have to put up too much collateral, which is incredibly valuable.
[Rep. R. Scott Campbell (Vice Chair)]: So if I could just interrupt one second. That's why I was asking, you don't you don't participate in this. Okay.
[Louis Porter (General Manager, Washington Electric Cooperative)]: We we don't because we're not a market participant in the same way and because of how we borrow.
[Rebecca Towne (CEO, Vermont Electric Cooperative)]: We do not borrow through RUS. We buy borrow entirely through banks. We borrow from CFC and also CoBank, which both are cooperative banks that serve utility infrastructure. We publish all of our financial reports just we have we try to make sure that we are very transparent about what is happening. So anytime you wanna check-in on what's going on, they're up there on our website. And this is our rate trajectory. We just implemented a 2.99% rate increase effective January 1. As you can see, it has been a while since we've gotten down to to what inflation looks like. In '23 and '24, those were largely driven by the power supply markets. And while we are about 90% hedged with power supply contracts, We do not own any generation, so everything is through contracts. But even some of those contracts have market following provisions, so they will still go up when the market goes up. And although they have caps and limits on them, and some of that is also driven just a 100% purely by market. So the markets went kind of crazy. Transmission costs also went up significantly those years because there were some capacity challenges within New England and the solutions to those that were effective from making sure there was enough electricity, but they were not low cost. And then finally, just wage rates, which drives everything from our own payroll benefits to our vegetation management costs and what some of that looks like.
[Rep. Christopher Howland (Member)]: There's a term that you use and now I'm gonna watch it. So market following, your contracts have market following. Provisions. Provisions. Correct. What percentage of your contracts are those provisions that you're saying?
[Rebecca Towne (CEO, Vermont Electric Cooperative)]: Oh, that's a good question. Roughly.
[Rep. Christopher Howland (Member)]: I I know it's not fair.
[Rebecca Towne (CEO, Vermont Electric Cooperative)]: Would say roughly. 60%. Okay. So majority. The majority. So we get, and how I came up with that is we get about 55% of our power from hydro Quebec. And that has And we have two hydro Quebec contracts. One is with all of Vermont and one is our own because we connect through the Canadian border to hydro Quebec. So of all the utilities, we get the largest percentage of from hydro Quebec. And both of those HQ contracts have market evolving provisions. Yeah.
[Louis Porter (General Manager, Washington Electric Cooperative)]: And
[Rep. R. Scott Campbell (Vice Chair)]: so when you say the ISO contracts, those those are spot market, mostly natural gas generated increases. I mean, the the the increases in '23 and '24 are mostly
[Rebecca Towne (CEO, Vermont Electric Cooperative)]: When we were on the market, it was primarily driven by natural gas. Correct.
[Rep. Christopher Howland (Member)]: Quick questions. How much does a rate case cost? Well, that's a good question.
[Rebecca Towne (CEO, Vermont Electric Cooperative)]: We these rate increases that we have done have all been internal labor hours, so we haven't really calculated them. So it's really just for us time and energy and other things we could otherwise be doing. It takes hundreds of hours to put together a rate case.
[Rep. Christopher Howland (Member)]: Yeah. What's your residential kilowatt hour rate?
[Rebecca Towne (CEO, Vermont Electric Cooperative)]: At 22¢. That
[Unidentified Committee Member]: was gonna be is that straight right across the board?
[Rebecca Towne (CEO, Vermont Electric Cooperative)]: The first 100 megawatt hour is at a lower rate. I can't recall it off the top of the head. And then it then it's And
[Unidentified Committee Member]: are you starting to do renegotiate with HQ now, or the when did that process start?
[Rebecca Towne (CEO, Vermont Electric Cooperative)]: If you're gonna even consider that. So that contract goes into the twenty thirties, and so not yet. Okay.
[Rep. R. Scott Campbell (Vice Chair)]: So the previous person here talked about how net metering affects your Can you give us what you see on your end versus what they were seeing? Is it similar? Are you seeing an increased cost shift there as well?
[Rebecca Towne (CEO, Vermont Electric Cooperative)]: Yeah. So we similar to Washington Electric Co op, our net metering, we have about 10% of our residential meters that are on net metering. For us, the impact of that 10% is a little different because we're 50% commercial industrial and 50% residential, so it doesn't have the same revenue impact for us. But we we estimate, and I this number is a little old, but the last estimate that we did two years ago was just over 2,000,000. I wanna say $2,400,000 of cost shift between other members and then those who are net metering.
[Rep. Christopher Howland (Member)]: Thank you.
[Rebecca Towne (CEO, Vermont Electric Cooperative)]: And then the last thing I wanted to talk about is reliability. So when we survey our members, we survey our members every year and we resoundingly hear the same thing from them every single year, which is the most the most important thing to them by far is affordability. And the second most thing important thing to them is reliability. And if those two things don't line up, then they don't care so much about the rest of it. So this is our reliability information. The top graph is frequency. So on average, how frequently do our members experience an outage every year? And then the bottom graph is duration on average, how long minutes are those outages? And the two different lines, you'll see our goal. We have a statewide goal that we share with our regulators. And the bottom one is without storms. And that is what we are measured against for the goal. And the top line is with storms. So you can see two things. One, much more erratic through the years, so that is less controllable for us. So for us, we're very proud that the more controllable sort of everyday stuff, we both we very much exceed those metrics and also are pretty stable through the years. And storms really do a number on what those statistics look like. We did have one major storm in December. It was about forty eight hours, cost about $500,000. So we were lucky that this year was better than some. And as you can see, you know, '22, '23, '24, they were rough. We also, similar to Washington Electric Co op, spend some time on spend a lot of time. We spend about $14,000,000 per year on our capital plan. The majority of that is on our transmission and distribution system. And we also get FEMA dollars whenever we have the opportunity. We've we've been able to have millions and millions in FEMA projects. Actually, we just have three projects that were approved from storms Finn and Jerry, so back in the 2024. So we'll be working on those the next couple years to get those in place. And the whole goal is to just find areas that continue to be vulnerable and to improve the reliability in those areas. We anticipate about a one to 2% growth in sales every year over the next, you call it, fifteen, twenty years, however long you think those projections are worth, and most of that driven by electrification. So where we can, we're also looking for where do we see growth happening, how do we pair that with reliability, and how can we capture value for both of those future needs through one capital? Yeah. So one, two, three.
[Rep. R. Scott Campbell (Vice Chair)]: Quick question about about the cost shifting question. That's 2,400,000. How would I we relate that to a percentage or something? It was you're talking about total revenue or something? Or
[Rebecca Towne (CEO, Vermont Electric Cooperative)]: Yeah. That's $2.2400000.0 annually. So our total revenue is 100,000,000. So that's zero.
[Rep. R. Scott Campbell (Vice Chair)]: 2.4%. Yeah. And is that percentage around the same for you also? A little higher for us. We have
[Louis Porter (General Manager, Washington Electric Cooperative)]: a $23,000,000 revenue basically and about
[Rep. Christopher Howland (Member)]: a million dollars. Okay. Thanks.
[Rep. Bram Kleppner (Member)]: First of all, I think the fact that cost and reliability are at the top of your customers' lists is a testament to the fact that your electricity rarely damages people or property, so safety is not in their minds, so Congratulations on keeping your people safe. Thank you. But related to that, you'd added sustainability to your goals. And I'm wondering about security in terms of how many cyber attacks you get and how are you protecting from bad guys. Yeah.
[Rebecca Towne (CEO, Vermont Electric Cooperative)]: That is an increasingly important topic, I would say. So we have a cyber team, and we have I can go into much detail about all of the cyber plans we have. We have a we have a matrix that we sort of work against improving in all of these areas to improve our cybersecurity. So we take it pretty seriously. And certainly, as we're seeing AI grow, the cyber attacks are increasing. We report our cyber attacks and what that looks like to our board every month. And we get hundreds, if not thousands of cyber attacks all the time, but most of them are just run of the mill and and stopped immediately by the systems that we have in place. And so what we're really focused on is anything that gets through sort of those first couple lines of defense. We also work on we have a cyber incident response plan, and we are working to build and improve our business continuity plans. So we spend a lot of time Yeah. Cybersecurity physical security, of course, as well, but also cybersecurity.
[Rep. Bram Kleppner (Member)]: Did I understand you just say that AI is generating attacks on your system now?
[Rep. Christopher Howland (Member)]: Oh, yeah. Yes.
[Rebecca Towne (CEO, Vermont Electric Cooperative)]: Yours too. Thank
[Rep. Bram Kleppner (Member)]: you. Thank you. No. Thanks.
[Rep. Kathleen James (Chair)]: Yeah. Question.
[Rebecca Towne (CEO, Vermont Electric Cooperative)]: That prompts a whole bunch of other questions. That's fantastic.
[Rep. Kathleen James (Chair)]: But you will save for
[Rebecca Towne (CEO, Vermont Electric Cooperative)]: the future. I will, madam chair. Permitting costs Yeah.
[Rep. Christopher Howland (Member)]: On an annual basis. Do you have a sense of what that looks like for you kind of on the regular?
[Rebecca Towne (CEO, Vermont Electric Cooperative)]: I would have to cycle back on that, but, you know, certainly, you know, tens of thousands per project for sure if we're in an area that you know, these FEMA projects that I was just talking about. We have three FEMA projects. We're delighted. They are in wetlands and bat habitat. And so we will probably spend, you know, 10 to 40,000 per project on that.
[Rep. Christopher Howland (Member)]: Yeah. I would be interested in just Sure. If you're able to share the last few years Sure. Knowing that you all need to move and harden the lines understanding what additional problems you're encountering.
[Rep. Kathleen James (Chair)]: Thanks. Great. Thank you
[Rep. Christopher Howland (Member)]: so much for your time. Thank you.
[Rep. Kathleen James (Chair)]: Really appreciate you being here. So here's the plan. We're gonna go offline, and we will go back on live in five minutes. So that's gonna give everybody time to switch up and get set. Okay? Alright. Thank you so much.