{"id":17613,"date":"2017-05-15T09:33:50","date_gmt":"2017-05-15T15:33:50","guid":{"rendered":"http:\/\/lastbestnews.com\/site\/?p=17613"},"modified":"2017-05-15T09:33:50","modified_gmt":"2017-05-15T15:33:50","slug":"beartooth-electric-the-little-co-op-that-could-and-did","status":"publish","type":"post","link":"https:\/\/montana-mint.com\/lastbestnews\/2017\/05\/beartooth-electric-the-little-co-op-that-could-and-did\/","title":{"rendered":"Beartooth Electric: The little co-op that could, and did"},"content":{"rendered":"
\"Tippet\"<\/a>

Ed Kemmick\/Last Best News<\/p>

One recent project of Beartooth Electric Cooperative was to run new power lines to the Tippet Rise Art Center near Fishtail. Tippet Rises generates some of its own power, but augments it with energy from the co-op. Just outside the entrance to the art center, at the base of the pole at left, the electrical lines go underground.<\/p><\/div>\n

The trustees of the Beartooth Electric Cooperative recently informed members that they would see an average reduction of 5 percent in their electric bills starting July 1.<\/p>\n

That\u2019s notable in itself, but it follows three other rate reductions totaling 20 percent over the past two years. The idea that energy consumers anywhere would see a total rate reduction of 25 percent in a little more than two years seems incredible.<\/p>\n

The really remarkable thing, however, is the story of how Beartooth was able to pull itself away from the Southern Montana Electric Generation and Transmission Cooperative, whose disastrous business decisions led to the steep rate increases in the first place.<\/p>\n

Because the fact is, even with all those reductions, electricity rates paid by Beartooth\u2019s members are now somewhere close to the average in Montana.<\/p>\n

SME finally went into bankruptcy in 2011, and Beartooth narrowly avoided declaring bankruptcy itself. After what Beartooth co-op member Arleen Boyd called \u201can astonishingly difficult exit\u201d from SME, it considered merging with another co-op based in Wyoming.<\/p>\n

The director of that co-op successfully guided Beartooth through almost three years of quasi-independence, but trustees recently decided not to go through with the merger. Now, they are in the midst of hiring a new, permanent manager of their own and moving forward as a completely independent co-op.<\/p>\n

They also managed to sign an energy contract that will keep prices stable for at least the next five years. And everything they\u2019ve accomplished has been done in an unusually open, transparent way.<\/p>\n

\u201cWe\u2019ve created something kind of different here,\u201d said Boyd, who chairs the co-op\u2019s risk management committee. \u201cI believe this and I\u2019ve heard this from many people\u2014I think we\u2019re the most open co-op in Montana.\u201d<\/p>\n

\"CapreAir_Variable\"<\/a><\/div><\/div>Jim Webb, Beartooth\u2019s current general manager and president and CEO of Lower Valley Energy<\/a>, a co-op headquartered in Afton, Wyo., said few co-ops in the country can match Beartooth\u2019s openness.<\/p>\n

\u201cBeartooth is up there in the top 5 percent for transparency,\u201d he said, and that openness worked so well for Beartooth that Lower Valley Energy has benefited from its partnership with the Montana co-op.<\/p>\n

\u201cI learned a few things that we hadn\u2019t done at Lower Valley,\u201d Webb said. \u201cWe started expanding what we were doing. There shouldn\u2019t be anything we have to hide.\u201d<\/p>\n

Boyd said that besides having good solid leaders\u2014Richard Peck was the manager before Webb took over three years ago\u2014Beartooth was able to pull itself out of a desperate situation because so many members of the co-op became deeply, passionately involved in righting the ship.<\/p>\n

And they pushed for transparency and open communication because they were shut out of Southern Montana Electric\u2019s decision-making process. In fact, in the spring of 2010<\/a>, Billings police officers were called in by SME management to keep Boyd and other co-op members from attending meetings of the SME board.<\/p>\n

\"Arleen<\/a>

Arleen Boyd<\/p><\/div>\n

They were told that if they tried to enter the co-op\u2019s offices in an industrial park on the West End of Billings, they would be arrested for trespassing. After being treated so badly and ignored for so long, members of the co-op resolved to reverse that state of affairs after Beartooth broke away from SME.<\/p>\n

Unless there is a legal reason to keep something secret, everything discussed by board members, every study and piece of correspondence, is posted on the Beartooth website<\/a> or otherwise made available to all members.<\/p>\n

\u201cOur attitude since Day 1 is that our members own this co-op,\u201d Boyd said. \u201cIt has just been, in my opinion, invaluable. \u2026 The degree to which we do it, and the fact that we actually do it, is unusual.\u201d<\/p>\n

Beartooth Electric, headquartered in Red Lodge, was incorporated in 1938 and now serves about 4,300 members in Stillwater, Sweetgrass and Carbon counties, as well as a portion of Park County, Wyo.<\/p>\n

Beartooth was one of five rural electric co-ops\u2014with Fergus, Mid-Yellowstone, Tongue River and Yellowstone Valley\u2014and the city of Great Falls that belonged to Southern Montana Electric, formed in 2003.<\/p>\n

Leaders of SME blamed the co-op\u2019s rapid decline on a depressed wholesale power market, unfavorable contracts and lost customers, but critics\u2014including members and non-members\u2014blamed those leaders themselves, mostly for building a 40-megawatt natural-gas plant after abandoning plans to build a much more costly 250-megawatt coal-fired plant.<\/p>\n

Boyd said Southern Electric made some \u201chugely stupid assumptions,\u201d among them that it would add many more customers than it had and that energy consumption by all users would inevitably increase. In fact, Boyd said, growth in energy use has been flat in recent years, partly because of energy conservation efforts, partly because of more local power generation\u2014especially in California, with lots of solar power, and in the Northwest, with lots of wind power.<\/p>\n

SME also lost its supply of relatively cheap energy from the Bonneville Power Administration and started buying power from PPL Montana. By contract, it was buying far more power than it needed, with the result that it was re-selling electricity at a big loss or couldn\u2019t sell it at all in a depressed market.<\/p>\n

Boyd was on the SME board in those days, and \u201clooking at those numbers it was so obvious they were heading toward the wall.\u201d<\/p>\n

In 2012, Beartooth hired Peck, in what would be his last job in a long career with rural electric co-ops, to restructure the co-op during SME\u2019s bankruptcy proceedings. After a long, bitter court fight, Beartooth Electric was allowed to sever its ties with Southern Montana Electric.<\/p>\n

When Peck retired in 2015, Beartooth entered into a management services agreement with Lower Valley Energy, of which Peck had previously been president. Under that agreement, Webb and the LVE management team provided professional services to Beartooth for the life of the three-year agreement.<\/p>\n

Beartooth also agreed to consider merging with LVE, whose members had the lowest energy rates in the country back in 2012, when Beartooth\u2019s rates were among the highest.<\/p>\n

\"Jim<\/a>

Jim Webb<\/p><\/div>\n

Under the management of Peck and Webb, and with the broad involvement of Beartooth members, rates have dropped steadily and now are close to the Montana average. Beartooth continues to receive most of its power supply from Twin Eagle<\/a>, but as of this September will be under a five-year, fixed-rate contract with Morgan Stanley for a power supply.<\/p>\n

Mostly because Beartooth is doing so well and is positioned to keep doing well, the board of trustees, relying on the research of Boyd and her risk management committee, ultimately decided this year not to pursue a merger with LVE. It hired a national firm to lead the search for a new manager, who could be on board before Beartooth\u2019s management agreement with LVE expires in July.<\/p>\n

Boyd said it wouldn\u2019t be accurate to say the co-op\u2019s success has been surprising, because she always knew they could turn things around if they severed their ties with Southern Montana Electric. Still, she acknowledged, \u201cit\u2019s really astonishing that it went the way it did.\u201d<\/p>\n

In a report she wrote for an upcoming edition of the Beartooth co-op newsletter, Boyd said it was \u201cgratifying to tell members that we are on a solid, and pretty standard, path for an electric cooperative.\u201d The headline on her report is, \u201cNo Drama, Just Good Business.\u201d<\/p>\n

Thanks to the fixed-rate contract, Beartooth\u2019s annual power costs, now at just over $3 million a year, are expected to barely rise\u2014to a little under $3.3 million\u2014by 2023, the report says.<\/p>\n

Webb said Beartooth \u201cis in the sweet spot\u201d now, having signed a contract for fixed-rate power. Most co-ops are tied to a generation and transmission company, not a general provider like Morgan Stanley, he said, and \u201cwe\u2019re beating what any of the G&T\u2019s are offering right now.\u201d<\/p>\n

Webb said Lower Valley Energy completely understands Beartooth\u2019s decision to go the independent route, and he will step away from managing the co-op on more than amicable terms.<\/p>\n

\u201cI\u2019ve become good friends with every board member,\u201d he said, and LVE will \u201cprovide whatever services the new manager wants for as long as they want.\u201d Even so, he added, he doesn\u2019t expect the new manager to need much help.<\/p>\n

\u201cThe table is very much set for success for this person,\u201d he said.<\/p>\n

Boyd said finding the right manager will be important. Some candidates might find the transparency and the degree of member involvement a little daunting, she said, but she\u2019s convinced they\u2019ll find someone who appreciates those factors.<\/p>\n

With the energy world changing as quickly as it is, she said, the involvement of intelligent, committed members will be essential. When the co-op announced it was cutting rates as of July 1, it also told members it would be borrowing $1.9 million to replace all meters by 2019. Consumption data from those meters will help the co-op redesign its rate structure and ratepayer classes.<\/p>\n

\u201cThe next step for the board is to get more educated about rate design in a world with increasing renewables,\u201d Boyd said in that press release. \u201cOther co-ops are finding ways to keep changes equitable and make sure that distribution costs are covered.\u201d<\/p>\n

Beartooth board President David Peterson, a rancher who lives between Reed Point and Absarokee and has been a member of the co-op for 40 years, said, in something of an understatement, \u201cWe\u2019ve really come a long ways in the past six years.\u201d<\/p>\n

He said the guidance of Peck and then Webb was invaluable, and \u201ceverything just kind of come together after a few years. It looks like we\u2019re going to be in pretty good shape here pretty soon.”<\/p>\n","protected":false},"excerpt":{"rendered":"

The trustees of the Beartooth Electric Cooperative recently informed members that they would see an average reduction of 5 percent in their electric bills starting July 1. That\u2019s notable in itself, but it follows three other rate reductions totaling 20 percent over the past two years. The idea that energy consumers anywhere would see a […]<\/p>\n","protected":false},"author":1,"featured_media":17614,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[16,14],"tags":[5856,5852,5857,5855,5854,5858,5853],"class_list":["post-17613","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-montana","category-news","tag-arleen-boyd","tag-beartooth-electric-co-op","tag-david-peterson","tag-jim-webb","tag-lower-valley-energy","tag-richard-peck","tag-southern-montana-electric","prominence-top-story"],"_links":{"self":[{"href":"https:\/\/montana-mint.com\/lastbestnews\/wp-json\/wp\/v2\/posts\/17613","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/montana-mint.com\/lastbestnews\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/montana-mint.com\/lastbestnews\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/montana-mint.com\/lastbestnews\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/montana-mint.com\/lastbestnews\/wp-json\/wp\/v2\/comments?post=17613"}],"version-history":[{"count":2,"href":"https:\/\/montana-mint.com\/lastbestnews\/wp-json\/wp\/v2\/posts\/17613\/revisions"}],"predecessor-version":[{"id":17618,"href":"https:\/\/montana-mint.com\/lastbestnews\/wp-json\/wp\/v2\/posts\/17613\/revisions\/17618"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/montana-mint.com\/lastbestnews\/wp-json\/wp\/v2\/media\/17614"}],"wp:attachment":[{"href":"https:\/\/montana-mint.com\/lastbestnews\/wp-json\/wp\/v2\/media?parent=17613"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/montana-mint.com\/lastbestnews\/wp-json\/wp\/v2\/categories?post=17613"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/montana-mint.com\/lastbestnews\/wp-json\/wp\/v2\/tags?post=17613"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}