Cascade Views Podcast

Dave Markham - Powering Central Oregon

September 07, 2022 Michael Sipe - Central Oregon Leadership Discussions
Cascade Views Podcast
Dave Markham - Powering Central Oregon
Show Notes Transcript

Dave Markham has worked at Central Electric Cooperative for 25 years with 16 of those years as the President/CEO.  He has 38 years of electric utility industry experience.  

 For 25 years he has advocated for the treasure of the Northwest, the carbon free, renewable, low cost, federal hydropower system.  He has also testified three times in Washington D.C. in front of Congress about the significant delays electric utilities experience when requesting permits from federal land agencies to conduct routine maintenance and mitigate against wildfires.  Following several years of effort, federal legislation was passed to hold the federal land agencies accountable for delays.  

 He holds a Bachelor’s of Science degree from Southern Oregon University and a Masters of Business Administration from Colorado State University. He has lived in Bend for 32 years and has been married to his wife Danelle for 38 years and has three children and three grandchildren.  

Unknown Speaker  0:08  
I have to tell you my I think it's ironic that Oregon has one of the most aggressive carbon reduction goals in the nation. And our governor of our state wants to remove the only reliable, renewable and carbon free resource that we have in the Northwest right now.

Narrator  0:24  
Welcome to cascade views a discussion with Central Oregon leaders. Your host is Michael SIPE, local business and community leader Best Selling Author of the Avada principle and candidate for Oregon State Representative for House District 53 which encompasses southern Redman sisters, Tom hello in northern bend. The purpose of these discussions is to share the views and insights of local leaders from a variety of community sectors on a range of timely and important regional and state issues. With that, now, here's your host, Michael SIPE.

Michael Sipe  0:58  
Thanks for joining us on cascade views. This is Michael SIPE, and I'm excited to welcome Dave Markram to the show today. Dave's worked at Central Electric Cooperative for 25 years with 16 of those years as the president CEO. He's 38 years of electric utility industry experience for 25 years. He's advocated for the treasurer of the Northwest, the carbon free, renewable, low cost federal hydropower system. He's also testified three times in Washington DC in front of Congress about the significant delays, electric utilities experienced when requesting permits from federal land agencies to conduct routine maintenance and mitigate against wildfires. Following several years of effort, federal legislation was passed to hold the federal land agencies accountable for those delays. He holds a Bachelors of Science degree from Southern Oregon University and a Master of Business Administration from Colorado State University. He's lived in Ben for 32 years, been married to his wife, Danielle for 38 years, and has three children and three grandchildren. He's with us today to talk about the controversial topic of electrical power, where it comes from how it gets to us, and what some of the challenges are that we face. Hi, Dave.

Unknown Speaker  2:13  
Well, Mike, and thank you for inviting me to be part of Cascade views.

Michael Sipe  2:17  
You bet. And to kick this off, give us a little history on CEC, I'm going to if it's okay, I'm gonna abbreviate central electric Electric Cooperative into CEC if that's okay, how did it come about?

Unknown Speaker  2:29  
Well, you know, a lot of people don't know the background of electric cooperatives, but because you have to go all the way back to the 1930s. And part of President Roosevelt's New Deal. And part of that New Deal was to bring electricity to rural America through what was called the rural electrification program. And all the way back in the 1930s. There were nine out of 10 rural homes, they didn't have electricity. And back then investor owned utilities, they didn't want to serve rural areas because of the cost. So not for profit electric cooperatives were formed. And they were able to borrow money from the government at a very low interest rate, and it made it cost effective to bring lines to rural areas for electricity begin delivery. And in 1940, central electric filed its articles of incorporation with the state of Oregon, they borrowed $244,000 from the Rural Electrification Administration. And then a year later, in May of 1941. The first substation which was at the HSUS junction was energized, and it started providing electricity to 11 Farms. Then by 1953, and 13 years later, 12 years later, 90% of rural America had electricity, all this came about from the New Deal.

Michael Sipe  3:52  
Wow, that's fascinating. I'm one of the folks on this podcast that didn't know that. And his you know, I gotta tell you, I've been excited about this conversation for months ever since we met and chatted about it. So I'm already learning and I appreciate it. Maybe you could give us an overview of the organization as it stands today.

Unknown Speaker  4:11  
You bet. gone through a lot of transformation, Central Oregon. In the past 81 years, we have grown from providing electricity to those first 11 ranches to now we have more than 40,000 services. CEC we're the largest electric cooperative in Oregon, and we're one of the fastest growing in the country. Our service territory is large, it's 5300 square miles of Central Oregon. It goes all the way from hoodoo ski resort on the sand past East Isiah and Hampton and bend is our fastest growing area. And we serve the entire medical area Neff and 27th Street, all the residential the high schools and schools in that area 27th Street, east and south. CEC where governed by a nine member board of directors in the Eat serves specific geographic areas representing the communities that we serve. And these are elected three year terms, and each year three directors positions are up for election. Now almost all of the electricity we provide to our members, it's low cost is carbon free. Its renewable hydropower and is provided by the Bonneville Power Administration. So CCS electricity, we're 95% carbon emission free, and we're probably one of the greenest utilities in the nation. We have total utility plant of nearly 300 million, we provide right at 800 million kilowatt hours of electricity to our members annually. And we have 80 of the most amazing and dedicated employees that any CEO would be proud to have.

Michael Sipe  5:50  
I met one of them, one of your engineers I met at a function the other day. Great. Good. Yeah. So as I noted above, and you alluded to it just a minute ago, for the last 25 years, you've been an advocate for a carbon free, renewable, low cost federal hydropower system, but now with the proposals to remove the Snake River dams that's threatened. So before we dig on this some more, would you just give us a brief overview of the snake and Columbia hydropower system and kind of how that provides electricity to Oregon?

Unknown Speaker  6:25  
Yeah, and you know, I revert to our our hydropower in the northwest. It is the treasurer of our Northwest it to me, it's our economic driver in the northwest. In the Federal Columbia River Power System. It comprises 31 hydroelectric projects in the Columbia River Basin. And it provides about 1/3 of the total electricity that's used in the northwest. Now the Bureau of Reclamation and the US Army Corps of Engineers, they plan they design and they constructed and they own and operate these federal dams. And then you have the Bonneville Power Administration and it was established back in 1937. And they market the power generated from these dams and then they distribute the power through their high voltage transmission system. And as a sidenote BPA on 75% of the transmission in the Northwest BPA they provide electricity to 140 utility customers like CEC, but they also provide electricity to ports and tribes is the power is generated from these 31 Federal hydropower projects it's is transported by their by high voltage transmission lines to what are called point of delivery substations. They have one here and Redmond they have one out near Prineville. And then it's passed along to C C's transmission lines. Then it goes into distribution lines that you can see above ground in some neighborhoods underground. You'll see the cabinet's and others and then it comes to a service delivery point at your home. The hydropower system and provides 6344 megawatts of what I call firm energy. And that's going to be important, Mike in a few minutes when we talk about some topics. But that's nearly 56 billion kilowatt kilowatt hours of electricity. So, one kilowatt hour will electrify 100 watt light bulb for an hour. So the hydropower system provides 56 billion kilowatt hours of electricity is tremendous. The for Lower Snake River dams that have been in the news lately, they're located in eastern Washington and those dams were constructed in the 1960s and early 70s. In these dams, they provide a quarter of BPaaS operating reserves, which is additional generation that's needed during unexpected changes in generation or electrical demand. And BPA is required to hold these reserves to ensure reliability of the grid. Now the for Lower Snake River dams, they're critical to making certain that the Northwest that we had power during the arctic front that and the ice storms that hit in early 2021. And then they prevented blackouts during that heat, though we had in June of last last summer. So that's an overview of of the federal hydropower system and how power goes from there to your home.

Michael Sipe  9:24  
That's, that's fascinating. Let's talk about the dams. It everybody has probably seen in the news, you know, we've got Kate Brown, governor of Oregon, we got Jay Inslee, governor of Washington, proposing to tear him out. Yep. What are the counter arguments to that? And what I think I already have a clue where this is going, but what are the counter arguments and what are the downsides to what they want to do? Yeah,

Unknown Speaker  9:49  
and, and this is a part like, like you said, In the beginning, I've been in this business for 38 years. I've been working at Central electric for 25 years and this is the first time I have in my career that I became really concerned about the reliability of our power. And I'll start by saying really only Governor Brown has come out and specifically supported breaching of the Lower Snake River dams. Governor Inslee has stated that a plan should be implemented to replace the benefits of these dams to enable breaching to move forward so indirectly, but then then Senator Murray of Washington Governor Inslee was last week they released their final report on the Snake River dams, and it ended up concluding that breaching the dams is not feasible in achieving the region's clean energy goals. The report stated that clean energy solutions they have to be in place before dam removal can occur. So again, specifically talk about breaching but I have to tell you, Mike, I think it's ironic that Oregon has one of the most aggressive carbon reduction goals in the nation in our governor of our state wants to remove the only reliable, renewable and carbon free resource that we have in the Northwest right now. Now, if these dams would have been breached in the winter of 2021, in the summer of 2021, we certainly would have experienced blackout situations, and that's in a minimum in eastern Washington. Back in 2020, BPA released its columbia river systems operation final environmental impact study, and it stated that breaching the Lower Snake River dams would end up creating an additional 3.3 million metric tons of carbon dioxide. And that's basically a 10% increase in power related carbon emissions across the entire Northwest. It would also double the region's risk of power shortages and potential blackouts, and also substantially increase electricity rates to consumers and, and that's always top of mind. And don't get me wrong, like solar and wind. They're good generation resources. But I think everybody knows their internet and resources. In battery storage technology is not advanced yet, to allow power to be stored to get the Northwest through an extended arctic blast or heat dome, you have to have a firm energy source, like the hydropower system or natural gas fired generation that can be used to backup solar and wind. And it can only be natural gas generation if the dams are removed.

Michael Sipe  12:33  
Well, it also sounds kind of expensive to me, if you're gonna go tear those things out. I mean, how much might it cost to tear them out? And you alluded to some environmental considerations, perhaps in the removal? And also seems like we lose the capacity to transport freight by barge, and we have to turn to truck and rail? What are your thoughts on that?

Unknown Speaker  12:54  
Absolutely. And, you know, I don't know if they ever physically removed the dams, a breach them and maybe go around them. But it's estimated that breaching I've seen an estimate of breaching those 44 Lower Snake River dams at $1.1 billion. Now, the other part, I think it was e three had a study out that said energy replacement costs could be as high as $77 billion. That includes the cost of all the new transmission lines that would have to be constructed. If you think about the geographical area, and the environmental impact of building solar and wind to replace the power generated by those Lower Snake River dams would be extensive. And and then you have to add the geographic area needed for the batteries and the potential environmental concerns that go along with the lithium batteries that at this time can only provide four hours of energy. I think it was Pacific Northwest waterways Association, talking about barging they estimated that the loss of barging in increase in truck and rail to move freight and we require up to $1.1 billion in public and private transportation in infrastructure improvements in it would also increase fuel consumption by nearly 5 million gallons a year. And that they also stated in that study that the annual carbon emission increase, it'd be equivalent to adding nearly 200,000 cars to our highways. We have Mike we haven't even addressed the impact of the farming operations with the loss of irrigation. It's not just the impact of removing the dams like you said the barging the farming the truck and rail all of that it impacts everything with our environment.

Michael Sipe  14:49  
Yeah, this this just seems foolish to me to to even be in this conversation of of breaching them, but they have been in place a long time as you mentioned. What about that? operating and maintenance costs. Sometimes I hear people complain that they cost too much to maintain. And what's that about? Well,

Unknown Speaker  15:09  
over the past 20 years, BPA, they've invested that $2 billion into refurbishing the turbans at the dams. On the lower Colombian steak rivers. The BPA is fully funded through its ratepayers, not the taxpayers. And every year they make their treasury payments, and they make them on time. Now, it's some point in the future, the Lower Snake River dams, the four, you know, they'll need their turbans refurbished, and I believe the costs are estimated be at 600 million. It sounds like a lot, certainly not $77 billion, that will cost replace those with with some other resources like solar and wind. But if you look at the power that those dams generate, that only adds about 50 cents per megawatt hour that is generated at these dams that, you know, maybe it's very small amount, when you take into account that these turbines, they have an operating life of 50 years. And with solar, you start degrading that panel, you know, in 20 years, they have to be replaced. And wind turbines, I think you may be up around 40 years, but you get 50 years out of these out of these turbine. So overall, the replacement costs are not that much in in there, these costs are baked into our rates that we pay.

Michael Sipe  16:35  
So let's do a little hypothetical. Let's assume Oregon, does what it did with measure 110 the decriminalization of drugs and and says, you know, we're just going to decriminalize them. And we'll figure out how to treat the Addicks later. And we know how that's worked out. What if we did that with the dams? What if what if we went ahead and breach the dams assuming that Oregon and Washington agreed and I don't know who has to agree, but assuming we just went ahead with that, and we don't have the replacement system in place? I think there's an there was an opinion piece in the bulletin today about the fact that we don't have the the alternate system in place, but but where would they? Where would we get our electricity? And you know, and what are the kind of the pros and cons of this? How would we survive? Well, that

Unknown Speaker  17:20  
just start off that. The good thing about this is that our governors in Oregon to Washington to could not reach those dams. Now, that can only be done by an act of Congress. There is a federal lawsuit right now, and the judge could order additional spill over the dams. But for the sole for the dams to ever be breached. It requires an act of Congress in and I don't believe, ultimately, that will ever happen. You never want to say never. But if the power generated by these dams is lost, there's there's basically there's only three things that can happen. Basically, you give up reliability, and you settle for blackout situations. Our thirst for energy in the Northwest and across the country continues to grow. You saw there was an editorial piece in the bulletin today about is Oregon ready for growth and electricity is here, we're trying to remove electricity sources, and we're trying to electrify the state with cars and trucks. People don't realize the infrastructure upgrades and the amount of energy that that's going to take to do that. So you're gonna have to give up reliability and settle for blackouts. And we start looking more like Europe unless we have a significant technological breakthrough with battery technology, because when we go into a hot spell, or a cold front in Oregon, and we haven't had a real cold front for about 10 years now we're it got 20 to 25 degrees below in Central Oregon. And and those usually lasts for about a week dams. Dams can provide around the clock energy, these batteries can only go for hours. And you know, when it's the hottest, and the coldest. Usually your wind doesn't blow. And and so on those days you have sunshine, that's great. If there's days that you have storms, you're not going to get this the solar generation you will get the wind. So there has to be a significant technological breakthrough. The other thing is building small nuclear modular reactors and that's a whole nother story. You have to have a firm power resource if you're not going to do natural gas generation. You're not going to do the dams. You have no choice but to go to nuclear modular reactors and I find correct That's not legal in Oregon. that would have to be changed by the voters. So again, there's there's a lot to this, we cannot be going to electric vehicles, electric trucks on our roads, putting in electric infrastructure and removing the firm, reliable resource that is truly the treasure the Northwest. Mike.

Michael Sipe  20:20  
What a great summary of the situation. This has been great. I, I've got 1000 questions. I'm sure we could go on for hours. But But we got to wrap up for this. This segment, man, I hope we can maybe have another conversation soon. But in the last couple of minutes, what would you like our listeners to know about CEC or the topics we've been discussing? Well,

Unknown Speaker  20:42  
I think what's really, really important people are so busy in their daily lives, that it's hard to get involved in things such as this, I think we take for granted electricity, you when you go home, you want the lights to turn on. And you want to be able to make your coffee in the morning. And we're so busy in our lives that sometimes we don't make the time to get involved. And just to voice our opinion, and whether the listeners agree with me or not. I think it's very important to voice your opinion, I hope. I hope that I've educated some people out there and they'll get involved, but that our congressional leaders, they need to hear, you know, the opinions of your listeners, and how they feel about their future of their electricity, about reliability about costs. If there's a takeaway from that, that's what I would ask. The other thing is central electric. Our business model is wonderful, the cooperative business model. I don't think I even mentioned in here that, you know, Pacific power's rates, they're 30% higher than central electric. So if you're a member of central electric, you're getting a pretty darn good rate. If you're a customer of Pacific Power, I'm sorry. But our business model is wonderful. It works. We have low cost, carbon free hydro, we have a great business model, we pay dividends to our members on an annual basis are called capital credits. It's an excellent model that I've enjoyed for 25 years.

Michael Sipe  22:15  
Dave, it's been really interesting having you on the show, we got to do this again soon. My main takeaway, I think, is just the the enormity of the infrastructure that's in place and and how well it functions also the the issue about how imperative it is to have reserved capacity and and stable capacity that we can just count on. We're witnessing the lack of that in Europe, as you alluded to before, and now they're actually facing what we might call sort of the Dark Ages, particularly coming into the winter. And, man, we don't want that for Oregon, that's for sure. So I really appreciate your message today. I sure appreciate you taking the time. I know you got a lot to do and I'm just grateful that you take the time with us. So

Unknown Speaker  23:03  
Mike, I appreciate you inviting me on and and I look forward to getting to visit with you some more about these topics and appreciate your interest.

Michael Sipe  23:13  
You bet my guest for this show has been Dave Markham, President CEO of central Electric Cooperative. You can learn more about op C O P CEC dot C O P Thanks for tuning in.

Narrator  23:31  
Thanks for listening to cascade views with Michael SIPE. To find out more about Mike the upcoming election. The key issues he's focused on in his campaign to represent Central Oregon and Salem as a state representative. Visit www dot a voice for Central that's www dot a voice for Central You can get your own copy of Michael SIPE best selling book the Avada And finally, please vote in the upcoming election. Your Voice Matters