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THE ENERGY ROADMAP

2017 OPALCO ANNUAL REPORT


TABLE OF CONTENTS

Orcas Power & Light Cooperative 183 Mt. Baker Road, Eastsound, WA 98245 www.opalco.com

Contents Mission and Values

01

Message from Leadership

02

BOARD OF DIRECTORS:

Capital Projects

03

Vince Dauciunas – President (San Juan)

This Electric Life

05

Dr. Jerry Whitfield – Vice President (Shaw)

Energy Efficiency and Conservation Savings

07

Energy Assistance

09

Brian Silverstein (Lopez)

Co-op Finance Report

11

Peter Garlock (Lopez)

Rock Island Communications

13

Randy J. Cornelius (Orcas)

Community Solar

15

Future Planning

17

Meet the Team

19

Winnie Adams – Treasurer/Secretary (Orcas) Mark Madsen (San Juan)

MANAGEMENT Foster Hildreth, General Manager Russell Guerry, Manager of Operations & Engineering Nancy Loomis, Manager of Finance & Member Services


MISSION AND VALUES MISSION STATEMENT Orcas Power & Light Cooperative (OPALCO) serves our members with safe, reliable, cost effective and environmentally sensitive utility services.

VALUES STATEMENT The OPALCO Board of Directors and Employees strive for excellence with a passion and determination that is founded on the following values. These values inspire, guide and determine our conduct in carrying out our mission:

• We are dedicated to the 7 Cooperative Principles. • We are committed to building, nurturing and preserving lasting relationships with our Member-Owners and among ourselves.

• We hold ourselves accountable to the highest legal and ethical standards.

• We are dedicated to financial and environmental stewardship through sound governance, management and operating practices.

• We are a responsible, member-owned organization. • We seek and implement innovative solutions.

Foster Hildreth

Safety and local reliability are two of OPALCO’s top priorities, and GENERAL MANAGER we made great progress on those fronts in 2017. Completing the submarine cable replacement between San Juan and Lopez islands was a major accomplishment and “George” will provide reliable, efficient power and fiber communications for the next 50-80 years. A lower profile but equally important project is securing a second 69KV power connection directly from Bonneville Power Administration (BPA) at our Decatur Substation. BPA has had a policy of “one point of connection per power customer,” but our long-time relationships with BPA and our new relationship with power provider co-op PNGC, paved the way for this unprecedented project which gives us the ability to route power to Orcas from two directions. We will have greater redundancy, increased capacity and the ability to reroute power when faults occur on Shaw Island or the west side of Orcas. In 2018, we are upgrading lines and substations on Orcas and Blakely to complete the path for rerouting power from Decatur Island, through Moran State Park, all the way to Eastsound Village. In the process of preparing for our second BPA tap, our crews completely rebuilt the Decatur substation. I’m proud of our capable and committed engineering team for their hard work on design, coordination and oversight of these complex and critical projects. I want to thank our linemen, especially the Lopez crew, for their hard work rebuilding the substation. Their skillful effort has brought us greater reliability and redundancy that will serve our membership well for generations to come. OPALCO’s first community solar project started to come together in 2017 with member input, design, planning and contracting. When


MESSAGE FROM LEADERSHIP the project is built this summer, it will be the biggest community solar project in the state and provide our membership with two key benefits: 1) the ability to invest in solar and receive a payback over the life of the project without the expense and responsibility of a rooftop system, and 2) a co-op owned source of local renewable power to begin building resilience in case of emergency. This first project is a small step toward a vision of renewable micro grids across our service territory that will keep essential services powered up to serve our membership in times of need. Please visit OPALCO’s website (www.opalco.com/solar) and try out our solar calculator to measure the savings in kWh and dollars your investment in Community Solar could create. I couldn’t be more proud of Rock Island Communications, our scrappy little start-up that has surpassed all expectations for providing internet service to our membership. Not only has our wholly-owned subsidiary met its financial goals, but with the help of T-Mobile US, we have solved both the internet and cell phone crisis in San Juan County. The myriad of benefits of connection are felt by all who live and visit our island communities and, most importantly, our safety net for first responders is strengthened with greater communications in the field and continuous connection to mainland resources. As you will read in these pages, our talented Co-op team continues to serve the membership well with energy efficiency and fuel switching rebates, assistance to those who need help paying their power bills and thoughtful planning and programs to keep the lights on for the twenty islands that we serve. We are making strategic and prudent decisions today to enhance reliability and to

keep rates as low as possible now and well into the future. We take our mission seriously and the role we play in providing a good quality of life in San Juan County. We are here for you, our Member-Owners, and invite you to participate in This Electric Life: read our newsletter, vote in co-op elections, take our surveys and let us know how we can best serve you.


CAPITAL PROJECTS New Cable and Tap Installed In 2017, OPALCO replaced a submarine cable in the Lopez to San Juan crossing and installed a second 69KW tap from Bonneville Power Administration (BPA)— two major projects that will serve our membership with greater reliability and redundancy for generations to come. The crossing between Otis Perkins Park on Lopez and Pear Point on San Juan Island was a hub of equipment and activity as 400 metric tons of submarine cable were carefully laid down on the sea floor. This super-armored cable, manufactured by Sumitomo USA, replaced the existing 1977 cable. Spanning 2.6 miles and weighing in at 34 pounds per foot, this cable is expected to provide more than 50 years of service to San Juan County – delivering both power and fiber communications. Members named the new submarine cable “George” in honor of long-time OPALCO employee George Goff, who was instrumental in building our robust and reliable electrical distribution system. Watch our video documentary of the project (see link on right). The substation on Decatur Island, where the new 69KV tap from BPA was installed, was built in the 1950s and hadn’t changed much in the past 65+ years. To prepare for the new tap that BPA installed, and also the Community Solar project that will be installed in 2018, our crews are completely remodeling the old substation to meet our needs for the next 65+ years. What does this mean for our members? In October 2018, we will have redundancy for the entire east side of Orcas with two main feeders from our mainland power supplier to spread out the load in our system and reroute power during

Golden ticket winner Sara Greacen and family on the Jenny B to see the cable installation up close

Watch our 7-minute video:

www.opalco.com/submarinecable.


04 power outages. Our main tap from BPA comes into Lopez from the mainland, over to Shaw by submarine cable and then overhead on Shaw to serve Shaw, Orcas and several outer islands. In 2017, we had two power outages caused by trees falling into the overhead transmission lines on Shaw. With the new tap at Decatur Island, OPALCO will be able to immediately reroute power, keeping the lights on and businesses open. Work will continue in 2018 to upgrade substations on Orcas and Blakely to allow redundancy to Eastsound Village.

The new BPA Tap on Decatur Island

System Engineer Joel Mietzner designed and coordinated the Decatur substation rebuild

Formerly our most antiquated substation, the remodeled Decatur substation will now be the most sophisticated site in our system. The new substation is sized to meet our needs way into the future, and the 350KW Community Solar array and battery storage project will create the first micro-grid in our system. This is our first small step toward a network of local micro-grids to provide emergency power to our island communities. We will learn from this pilot program and begin to plan future projects to bring us up to a scale that could keep our essential services running even when our mainland power is out.

New structures at Decatur Substation


THIS ELECTRIC LIFE Switch to Electricity for Heating and Transportation and Save $$$! We love our pristine island environment and are committed to provide the cleanest, greenest energy available. Most of our electricity (>86%) comes from renewable hydroelectric power and we encourage our members to use this low carbon energy for their main heating source. Replacing carbon-heavy power sources like propane and wood with an energy efficient heat pump saves our members big money and is good for the planet. In 2017, OPALCO gave out $34,000 in heat pump rebates to our members. Not only do members save money on their total energy costs, but all of our energy dollars stay local and are put to work for our island communities. In 2017, we gave out 27 rebates for EV home charging stations. San Juan County has the most charging stations per capita in Washington state. Go green for our future members! Stay tuned for OPALCO’s This Electric Life Loan Program, coming to members, in 2018 to help with the cost of upgrading to a ductless heat pump and other select efficiency projects.

Electric Vehicles (EVs) are the future of transportation! EV car ownership went up 68% in San Juan County from June 2016 June 2017. If you think you can’t afford an electric car, think again. It’s more likely that you can’t afford NOT to make the switch when you calculate the savings; most will save a minimum of $1,200 each year just in fuel purchases.

Check out the cost and carbon savings calculators at www.opalco.com/EV, as well as vehicle comparison tools and a local EV charger map.

Reduce your carbon footprint

Look cool driving

Save $ on your overall energy bill

Get rebates through OPALCO


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ENERGY EFFICIENCY & CONSERVATION SAVINGS In addition to the fuel switching rebates through OPALCO’s This Electric Life incentives, the Co-op continues to advocate for energy efficiency and conservation. Through Bonneville Power Administration (BPA), we provide rebates; in conjunction with our partners at the San Juan Islands Conservation District (SJICD), we offer outreach events and efficiency programs; and with the certification of the Building Performance Institute, we offer subsidized Home Snapshot Energy Assessments to help members identify what measures make sense for their homes and businesses.

Progress in 2017 included: $123,542 paid out to members in BPA rebates 116 member efficiency measure projects completed! 321,020 kWh saved through BPA rebates 43 BPA ductless heat pump rebates to members 47 energy snapshots completed Booth at county fair introducing community solar and promoting energy efficiency In partnership with SJICD: 3 green home tours Cool School Challenge in 4 schools Monthly Energy Roundtables


08 BPA Appliance Rebates

10%

53%

BPA Commercial Lighting

BPA Heat Pump Rebates

While 2017 was very much focused on planning our first Community Solar project, we continue to support our members who generate their own renewable power and interconnect their system to our grid. Our M.O.R.E. (Member Owned Renewable Energy) program provides incentives to member generators and the M.O.R.E. Committee continues to advocate for local distributed energy.

274 interconnected members — including 37 new interconnected members

14%

11%

BPA Heat Pump Water Heating Rebates

BPA Insulation Upgrades Rebates

11%

1%

BPA Window Upgrades Rebates

Other Residential Rebates

$125,635 in WA State incentives paid out to 197 interconnected members $53,269 in M.O.R.E. incentives paid to 149 members


ENERGY ASSISTANCE Bridging the Affordability Gap for Co-op Members OPALCO cares about our members who struggle to pay their electric bill and our Member Services team is here to help. The cost of living is more expensive in our remote islands, including the cost to deliver power to 20 islands by way of submarine cables. There are two OPALCO programs designed to assist members in need: PROJECT PAL for emergency assistance in a pinch (one time per year) and ENERGY ASSIST, a monthly bill credit for qualified low-income households. Participation in ENERGY ASSIST has been lower than forecasted. The OPALCO Board increased the award amount for 2018 to $25 - $55 per month (depending on household size). Members pay for this program in a line item on their bills each month; it’s not a charity program, but a way for co-op members to level the playing field for each other. Please help spread the word and encourage those in need to call OPALCO or sign up online. For a single person, $25/month adds up to $300/year – equal to two months of power for an average user. Participation in the program is kept confidential.

ENERGY ASSIST PROVIDES A MONTHLY BILL CREDIT Household

Monthly Bill Credit

1

$

2

$

3

$

4

$

5

$

6+

$

Here’s what we did in 2017 PROJECT PAL

217 Members awarded PAL grants $48,833 in PAL funds awarded (highest amount to date) $27,390 received from member donations (Bill Round-Up and Monthly Donations)* ENERGY ASSIST

407 Member households participated – for a total of 768 people supported $81,957 distributed to members $106,868 collected from members (line item on bill) to fund Energy Assist

25/month ($300/year) 31/month ($372/year) 37/month ($444/year) 43/month ($516/year) 49/month ($588/year) 55/month ($660/year)

*Note: Additional funds come from any balance from the previous year and members who sign over their capital credit and/or rebate check to PAL


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Regina Penwell, Susan Evans, Marilyn Goff, Becky Griswold, Madeline Danielson, Anne Huhndorf and Jon Blomgren


CO-OP FINANCE REPORT 2017 Revenue

73

%

RESIDENTIAL

26% COMMERCIAL

1

%

Year End Executive Summary 2017

2016

kWh Purchases

229,155

208,313

Total Revenue

28,310

25,661

Cost of Power

8,916

7,943

Operations & G&A

9,971

8,877

Depr, Int & Taxes

6,023

5,779

24,910 $3,400*

22,599 $3,062

3.10

3.24

Equity % of Total Cap

43.7%

49.4%

Equity

39,152

39,277

Total Debt

52,162

41,407

(18,760) (1,102)*

(15,568) (1,218)

Total Expense Net Margins Tier

Capital Spending Capital Credit Retirement (net) Note: Numbers are in thousands

OTHER

*Revenues were higher than budgeted due to colder weather. As a result, OPALCO returned

~$1.5M to members at year end in a surprise bill credit and extended capital credit distributions.


12 2017 Expenses

22%

4%

DISTRIBUTION

CONSUMER ACCOUNTS

36

%

COST OF POWER

$982,000

$5,384,000

$8,916,000

24%

14%

DEPRECIATION, INTEREST, TAXES

ADMINISTRATION AND GENERAL

$6,023,000

$3,605,000

OPALCO’s full financial reports are available online at www.opalco.com in the Resource Library. In addition, board materials are posted on the Monday before each board meeting for member review.


ROCK ISLAND COMMUNICATIONS Our business model is unique and has driven us to early success. KEY DRIVERS HAVE BEEN

• To build a network on the utility’s fiber optic communications backbone • Members/Customers cost sharing of the Middle Mile fiber build • Members/Customers payment of the Last Mile fiber connection (minus Rock Island’s Construction Incentive, if taken) • Focus on public safety; coordination with first responder agencies county-wide OPALCO and its wholly-owned subsidiary Rock Island Communications have built a hybrid fiber and LTE wireless network that is currently serving more than 3,700 customers and growing in San Juan County, providing our community with comprehensive cell coverage through T-Mobile that extends all the way to the mainland. In our rural, remote territory with 15,000 meters spread over 20 islands, this communications system solves a number of critical problems for the utility and its members: public safety, controlling system maintenance and outage costs, and connection to critical resources and of course the greater world.

• Wireless LTE Partnership with an expert technology company (T-Mobile US) • Wireless LTE allows subscribers to connect to high-speed internet when fiber connections are just too costly • Established an early revenue stream to minimize start-up loans for operations


14 Accomplishments in 2017 include: Signed up 5 new LTE Fixed Wireless customers every single day (on average) for a total number of 1,300 new customers, approximately 300 more than forecasted Averaged roughly 40 wide-scale construction projects with an additional 170 active Last Mile projects all year long Rolled out 8 brand-new LTE sites, fully functional for T-Mobile phone LTE Fixed Wireless use and reliable Internet to those in surrounding areas Comprehensive cell coverage through T-Mobile extending all the way to the mainland Added ~130 miles of fiber to our network Upgraded the San Juan County network connectivity to 1 Gigabyte per second (Gbps) county-wide

Installed and activated over 90% of the county fiber backbone infrastructure, as planned Achieved our first EBITDA (earnings before interest, tax, depreciation and amortization) positive month in September 2017 Re-opened the Rock Island retail store with a full-service T-Mobile retail presence in May 2017, delivering over 1,250 brand new T-Mobile phone lines in San Juan County, while dominating the sales rankings within our distribution cohort of 90 stores in just 7 months Dramatically upgraded the entire fiber network topology, making it more scalable, more reliable, more redundant and more powerful, with the ability to handle 10x more data than in it did in 2016


COMMUNITY SOLAR! During 2017, we began our first ever community solar project on Decatur Island. We surveyed over 1,200 OPALCO members to better gauge their interest and get input about the structure of the program. Starting in March 2018, OPALCO members began to purchase units and become shareholders, collecting production credits on their bills each month. Puget Sound Solar will begin construction of the Decatur project in spring 2018 and the array will start producing its first power this summer. Community Solar gives OPALCO members a chance to generate clean, local power and see a credit on their monthly power bills. Participants will purchase units that represent a portion of the project’s generating capacity and then receive bill credits based on their unit’s portion of the production multiplied by the residential rate (currently $0.1007/kWh). The goal of the program is to spread the benefit among as many participants as possible. It is expected that it will take participants ~10.5 years to receive a simple payback (depending on actual production). OPALCO’s was the first community solar program to be pre-certified to receive Washington State Production Credits! Go to www.opalco.com/solar to use our cost and payback calculator, to learn more about Community Solar and to purchase your piece of the project!

Benefits for the project include: • Participate in local power generation • Build more energy independence • Create the first steps to having an emergency power source • 10% of project will benefit low-income members

Fun Solar Facts The array will produce ~570,000 kWh annually – that’s enough to power around 47 homes in San Juan County (based on average annual household usage) Located on 1.5 acres on Decatur Island There are 6,720 units available. Each panel weighs about ~44 lbs., which makes the whole array about the weight of three garbage trucks. This will be the largest community solar array in Washington State!


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FUTURE PLANNING A vision for our Island Communities

OPALCO is a forwardthinking organization and, while not a leader in technology, we are fast followers in service to our membership. We are planning our energy future and where our power will come from in the decades to come, while also working toward a goal of providing local generation for greater resiliency when mainland power goes out so we can keep essential services up and running. We hope BPA will always be the foundation of our fuel mix, providing the clean, green hydro that we can count on whether or not the sun shines or the wind blows. There are threats to our valuable federal hydro system in the Pacific Northwest; members need to advocate for the value of our hydro power and, in the long run, we know we need to be more self-reliant. Our main challenges will be acquiring land and easements for siting renewables (solar, wind and tidal) and obtaining capital funding and grants for local renewable power projects. Visitors to the islands benefit from our pristine and beautiful marine environment; however, we the residents foot the entire bill for a reliable electric grid and comprehensive communication infrastructure. Over the past year, OPALCO has been participating in the Comprehensive Plan Update with stakeholders in San Juan County. Our community vision must weave together all of the important elements of the environment, housing, renewable generation, sustainable utilities and community self-reliance, while also addressing the higher cost of living in the islands. Here is our vision for the future of our communities, built on our member-owned infrastructure:

With a modern grid and internet, San Juan County is poised to rise above its tourist economy roots. We see better jobs, wages and economic well-being for islanders. Electricity is cleaner and lower cost compared to fossil fuels in essentially every case. This is powering a rapid transition to electric transportation and heating. We see much lower carbon emissions, and lower cost of energy, keeping islander dollars local as a result. Transportation is shifting to Electric Vehicles (EVs), and there will be a remarkable rise in all-electric cars and public transportation in the islands. EV chargers will be widely available, especially in village centers. This will change the way parking is sited, resulting in more open walking space, with less vehicle traffic. Ferries will become fully electric. Currently, 63% of WA state fleet emissions come from ferries, due to the burning of diesel fuel. Electricity will increasingly be generated locally, through a combination of solar in summer, wind in winter, and tidal energy year round. Grid storage will help the county, town centers and critical services ride through extended outages. The economy becomes more diverse. More affordable housing accommodates a balanced population of young and old, from all walks of life. Local food production increases. We support our farmers and fishing industry for a healthy local food economy. All of this allows our beautiful county to preserve its pristine rural quiet character. This is just a snapshot of what may be. And OPALCO is committed to doing our part to build and maintain the infrastructure to support this vision.


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Eastsound Village from Fishing Bay Photo by Gene Nery


MEET THE TEAM The OPALCO team of dedicated, talented staff is the Co-op’s most valuable asset In 2017, we welcomed the following staff members to the team:

Krista Bouchey,

Joaquin Younger,

Greg Hiser [second from left above]

COMMUNICATIONS SPECIALIST

JOURNEYMAN LINEMAN (Orcas District)

METER TECHNICIAN

Krista is a long-time Orcas Islander, known to many from her previous role as the Executive Director of the Funhouse Commons. She lives with her dog and her kid in Eastsound.

Joaquin moved to Orcas Island from Colorado with his wife and two kids.

Greg joins the OPALCO team all the way from Delaware. He lives on San Juan Island with his wife.

Ken Loock [no image available] JOURNEYMAN LINEMAN (Orcas District) Ken and his family moved to Orcas from Henning, Minnesota.


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OPALCO team, January 2018


ORCAS POWER & LIGHT COOPERATIVE 183 MT. BAKER ROAD, EASTSOUND, WA 98245

WWW.OPALCO.COM

2017 OPALCO Annual Report  
2017 OPALCO Annual Report