Dear Members,

This month I have good news and bad news. You decide which you wish to learn of first. Read the following paragraphs in the order desired.

The Bad

Based on the information available today, and my initial analysis, I believe Hood River Electric Cooperative will need to increase retail rates in 2017. The last adjustment was effective with bills rendered on or after April 1, 2014.

We incurred an increase in our cost for wholesale power and transmission services from the Bonneville Power Administration in October 2015. To date, we have absorbed those increases. BPA has indicated it expects to increase wholesale rates again in October 2017. It has given an estimated range for each service: 4 percent to 9 percent for power, and 3 percent to 5 percent for transmission.

HREC paid about $4.68 million for power and $529,000 for transmission in the 12 months of September 2015 through August 2016. Even single-digit percentage increases amount to significant additional costs—especially when they occur every two years. Payments to BPA were 65 percent of total expenses for the same period.

In 2015, our non-BPA costs increased by 2.35 percent, which also creates upward pressure on retail rates.

I will keep you updated as more definitive information becomes available.

The Good

At its September meeting, your board of directors approved the retirement of capital credits. Members who purchased energy from HREC in 2002, 2003 or 2004 should receive a check for their patronage in November. The total to be returned to the membership of the years listed above is more than $617,000.

I am proud to say your cooperative is one of the most aggressive in the country at retirement of these margins from past years. In the 2015 key ratio trend analysis report of the National Rural Utilities Cooperative Finance Corp., HREC ranks 16th of 704 participating cooperatives for cumulative patronage capital retired as a percentage of total patronage capital. We rank No. 1 of 16 in Oregon and No. 3 of 50 electric cooperatives of similar size nationwide.

Following the 2016 retirement, HREC will have returned more than $10.6 million to past and current members. That figure exceeds half the capital credits accrued since inception of the utility.

John Gerstenberger, Manager