Co-Op Life - Summer 2016 final

Volume 73 65Number 34 Summer Fall 2008 2016
Vermont
Electric
CEO Update: Culture as a Pathway to Success
By Christine Hallquist, CEO
I n
2 0 1 2
VEC decided
to
m o v e
from a
command and control safety philosophy
toward a culture of engagement and
leadership with all employees. That year,
we lost one of our highly revered and
long-time lineworkers, Bruce Lamb, to
an on-the-job accident, which caused us
to rethink our approach. That accident
made us realize that the current safety
culture of our utility was not going to
keep people safe.
By all outside measures, VEC was
doing well. We were in a strong financial
position, were leaders in the use of
technology, had significantly reduced
our outages, and were receiving high
marks from our members. However,
we still had a “we versus them” culture;
those terms could apply to anyone.
As part of our education, we learned
from a Gallup study of 1.4 million employees
that improving employee engagement
is not simply about improving
productivity — although organizations
with a high level of engagement do report
22 percent higher productivity.
Strong employee engagement also results
in 48 percent fewer safety incidents.
As CEO, I recognize my responsibility
to lead by example. In 2012, I decided
that I must spend more time face-toface
with our employees and in the field,
as well as dedicate more time to public
outreach. In order to accomplish this
goal, I worked with our leadership team
to carve out 30 percent of my time to focus
on culture. In one conversation with
our Safety Technician, David Young, he
suggested I could start by doing regular
one-on-ones with all of the employees at
least once a year. I took up his suggestion
and continue to do them today. I
discovered that this is probably one of
the most effective things a leader can do.
We then started monthly meetings
with all company leaders to identify
what we need to do in order to improve
our culture and brought in training specifically
to help. As part of the training,
we learned about the Denison Culture
Model. The Denison Model is a comprehensive
and relatively easy to use
guide for organizational change. The
model describes the characteristics of
high-performance business culture and
leadership. This model and surveys have
been used by over 3,000 organizations
and are the basis of several on-going
research projects. We realized that this
model would help us address employee
engagement and guide VEC through
the changes needed to serve our membership
as the grid transforms to enable
distributed solar and wind generation
and storage.
The model looks at how a company
performs in four essential areas: Mission,
Involvement, Adaptability, and Consistency.
Within each area, there are three
groupings, for a total of 12 distinct measures.
The survey asks four questions for
each of the 12 measures to quantify how
well a company performs as a whole,
as well as how each division within the
company is performing. The results
are benchmarked against 1,000 other
companies from all industries. The results
are not to be considered “good” or
“bad;” rather they are used to create dialogue
within the company. We then set
company and personal goals to improve
our culture.
VEC has good member satisfaction
scores. We have reduced outages and
maintained financial stability. What,
then, is the problem? There is none; we
simply want VEC to continue to innovate
in the face of incredible change, and
we want our members and employees
to be excited about future challenges.
The Denison Culture model gives us the
tools we need to accomplish this.
The model provides a nice visual
to quickly identify how well we are
performing in each essential trait and
grouping. It also provides a systematic
approach on how to improve the culture
The first focus area is Mission, or
Continued on page7
Finally in a Good Place:
VEC’s COO Details the Co-op's Road to Recovery at the Annual Meeting
“Keeping
the
lights on”
is a phrase
often used
in the electric
utility
VEC's Chief Operating
Officer Jeffery Wright
business,
summoning the basic, bottom-line responsibility
of any company that provides electric
power. It’s shorthand, of course, for the
myriad uses of electricity – running refrigerators
and heating systems, powering TVs,
computers, milking machines, and industrial
equipment. But in the dark-at-sundown
early days of the 20th century it all started
with “keeping the lights on,” and that’s still
the touchstone for utility performance.
Fittingly, that’s how Vermont Electric
Cooperative’s Chief Operating Officer, Jeffery
Wright, began his presentation to Co-op
members at VEC’s Annual Meeting on May
21 at Smugglers' Notch Resort. His address
was remarkable for its candor.
“Keeping the lights on,” he said. “Five
to seven years ago I couldn’t have stood up
here in front of you and talked about that.
Let’s be honest.”
Wright, who came to the Co-op in 2008,
recounted some troubling VEC history that
many of his listeners remembered, including
its bankruptcy in 1996 and the highly regulated,
three-year recovery process that followed.
While bankruptcy status alleviated pressure
from creditors, it largely deprived VEC of the
ability to borrow funds to invest in an aged,
much-neglected infrastructure.
“As a result,” Wright said, “our maintenance
suffered, our safety record suffered.
Member satisfaction was poor.”
By the early 2000s, however, a sense of
ambition and commitment had taken hold.
In 2004, VEC purchased Citizens Utilities’
northern Vermont operations. That nearly
tripled the Co-op’s assets, such as poles, wires,
and meters, but the more-concentrated (less
rural) nature of the newly acquired territory
provided efficiencies that positively impacted
VEC’s overall operations.
Still, the next few years were tough. In
2005 a massive snowstorm set the Co-op
back on its heels, and the following year a lineworker
was badly injured on the job. These instances
triggered a Public Service Board (PSB)
investigation in 2007 into VEC’s failure to
meet state-mandated service quality goals and
safety standards. The PSB probed the company’s
business and financial practices as well.
That brought Wright’s account up to
2008, a year he described as the start of VEC’s
“road to recovery” as the Board and staff began
work on what became VEC’s Ten-Year Capital
Plan. It envisioned a comprehensive overhaul
and modernization of all elements of VEC’s
operations, from distribution lines to substations,
transmission lines to power line rightsof-way
overcome by vegetation in many parts
of the service territory. It wasn’t easy to know
where to start, Wright recalled. “There were so
many conflicting priorities!”
There was a financial hurdle, too. Enacting
these programs necessitated a 9.24-percent
rate increase, levied upon members who had
scant reason for confidence in their utility. Yet
the PSB approved the increase, with stringent
demands regarding safety, reliability, and outage
performance.
“We started in 2009, with the backbone
of the system, the substation and transmission
infrastructure,” Wright said.
The first projects were in some of VEC’s
most rural communities. An example was
Enosburg, where the Co-op undertook its first
full substation-rebuilding project. Why there?
Because, Wright said, “If we couldn’t keep the
lights on in Enosburg we couldn’t do it anywhere.
And we couldn’t. It was horrible.” And
now, seven years later, “We haven’t had a power-supply
problem in Enosburg since then.”
By 2010 outages in the Co-op’s vast territory
had been reduced by half from their high
in 2006. As the outage numbers went down,
member satisfaction went up. This was put
to the test by a December 2010 snowstorm
with fierce wind gusts that brought down
100 poles and left some 12,500 VEC members
without power.
“We braced ourselves,” said Wright, describing
the mood as VEC’s team prepared for
an onslaught of angry, impatient phone calls.
“Instead, we got more than 100 calls, e-mails,
and letters thanking us for the job we did! It
was a real morale booster for the staff.”
VEC’s trajectory has continued to be in
the direction of dramatic improvement. The
Co-op became skilled at leveraging federal
programs, for financial assistance after major
storms (more than $8 million in Federal
Emergency Management Agency disaster reimbursement
grants), for groundbreaking
technology-centered projects (a $10 million
Department of Energy grant to develop the
“smart grid” that has revolutionized outage
restoration), and for major reconstruction.
Here, Wright cited a $14.5 million economic
Continued on page 3

Page 2 - Summer 2016
co-op life
Vermont Electric Co-op Fall 2008 – Page 2
Annual Meeting Recap:
Balancing Cost and Innovation
Vermont Electric Co-op
It has become a tradition for Vermont
Electric Cooperative to start its Annual Meeting
each spring with a “safety moment.” It
drives home the point that VEC is a safetyconscious
company working in an inherently
dangerous industry, and just as important,
that VEC members, too, live in a world where
electricity is a near-constant presence. John
Varney, the Cooperative’s Safety Manager, has
taken these opportunities to instruct members
about safety tactics like “bunny hopping”
away from their cars (to reduce the risk of
shock) should they need to escape after colliding
with a power pole, and never trying to
cut away a tree that has fallen across the lines.
But this year, in his Safety Moment, Varney
emphasized how safety is an outlook: “We have
tried to come up with something to change the
way people think about safety.”
Not just electrical safety, he said, but safety
in all their daily activities. Slogans are easily
dismissed, said Varney, and people forget longwinded
instructions. “So we’re going to do it
with pictures,” he said.
The very first one, projected onto the screen
behind him, showed a person, from the knees
down, standing on the very top of a stepladder,
where, as everyone knows, there’s always a
warning sign that reads: “NOT A STEP.” The
audience guffawed. They laughed again at the
next picture: two people trying to hold a ladder
vertically while a third person climbed up. The
hits kept coming: a man using a circular saw on
a piece of wood held on his lap! (groans from
the crowd); someone hammering a nail with
a handgun; a woman peering through a tiny
clear spot on her ice-covered car windshield,
exclaiming, “I can see!” (laughter).
Varney showed nearly 20 of these photographs,
and they all underscored the message
that people tend to take shortcuts with safety,
and when you step back and look at them,
they’re plainly foolish.
Safety was a recurrent theme in the meeting.
In her CEO report, Hallquist highlighted
it as the first of six components of VEC’s “Strategic
Focus,” and noted the pragmatic value of
stressing safe work practices at the Co-op: VEC’s
Workers Compensation rate is now the lowest it
has been in eight years, which reduces costs for
the member-owned utility.
Election Results
Reporting on costs to the members who,
through their electricity purchases, provide
the capital for those expenditures, is one of
the important functions of the Annual Meeting.
Another is completing the election for for
VEC's Board President Tom Bailey delivers his address to members at VEC's Annual Meeting in May.
the Board of Directors. (Most VEC members
vote by mail or e-mail prior to the meeting, but
ballot boxes are open until 10:30 a.m. at the
meeting itself.)
This year there were elections for three seats
on the 12-member Board of Directors that
makes leadership and policy decisions for the
nonprofit utility and works closely with senior
staff. All were for four-year terms. In District
7, candidate Richard Goggin of South Hero,
who received 241 votes, will replace incumbent
John (Jack) Miller of North Hero, who tallied
168 votes. Also running in this contested race
were Jo Guerrieri of Grand Isle (123 votes), and
Paul Jarvis of North Hero (96 votes).
Five candidates competed in the race to
represent the West Zone on the Board. Incumbent
Ken Hoeppner of Jeffersonville was
victorious, logging 550 votes. Trailing him were
Dan Gaffney (Bakersfield, 468 votes), Joe Russo
(Alburgh, 199 votes), John E. Terrel (Waterville,
153 votes), and David C. Southwick (St.
Albans, 133 votes).
There was no contest for the East Zone
At-Large seat on the Board, where incumbent
George H. Lague of Derby was re-elected
with 1,078 votes.
The newly constituted Board held an organizational
meeting directly following the
meeting where they elected officers. Dan Carswell
(Franklin, West Zone I) is the new president,
succeeding Thomas Bailey (Derby, East
Zone II) who stepped down from the position.
George Lague (Derby, East Zone I) was
elected first vice president, and Carol Maroni
(Craftsbury, District 3) was elected second vice
president. Mark Woodward (Johnson, District
4) was elected secretary, and John Ward (Newport,
District 2) was elected to serve as treasurer.
Financial Profile
In his remarks, reviewing the Co-op’s performance
in 2015, VEC President Tom Bailey
noted a new development that, at least in
a small way, could reflect changing realities for
VEC and all Vermont utilities.
“For the past several years,” said Bailey, “I
have reported that northern Vermont’s economic
health as measured by our MWH
(megawatt-hour) sales growth was slowly but
steadily getting stronger. This year our MWH
energy sales are down slightly, at minus twotenths
of 1 percent (-.2%). Essentially, our
energy sales as compared to 2014 were flat.
Even though we added 138 members, moreefficient
appliances, conservation measures,
customer self-generation, and weather all interplay
to produce this MWH picture.”
Weather, and its effects upon electricity sales,
will always be variable. But factors like self-generation
(net metering) and better-performing
appliances are here to stay and must be factored
into VEC’s energy and economic planning.
Co-op Treasurer John Ward, in his summary,
noted that VEC’s 2015 revenues of
$77 million represented a decrease of eighttenths
of 1 percent (-.8%) from 2014. That
was not an unsettling loss, though, as Ward
and Bailey both reported that the financial
ratings agency Standard & Poor’s had actually
upgraded Vermont Electric’s rating to
“A-Plus With a Stable Outlook.”
“This is VEC’s highest financial rating ever,”
Ward reported. “Stronger financial ratings are
beneficial for VEC when negotiating power
supply contracts and in borrowing funds at
lower interest rates.”
Power supply costs, Ward explained, are
one of the Co-op’s two largest expenditures,
the other being its investments in VELCO, the
state’s electric-transmission utility, which uses
its revenues to maintain and upgrade the transmission
infrastructure. It’s an example of how
the costs and the benefits of utility investments
are intermingled. Transmission-grid improvements
are expensive, but they also save utilities
money by making the system more efficient.
And correspondingly, VEC’s leadership employs
technology at some cost to the Cooperative
to reduce VEC’s “peak” (periods of highest
electricity use).
Ward made the connection. “If we can improve
control of our peak power demands we
can lower our transmission costs,” he explained.
All this, as Bailey said, goes to support
a VEC service territory covering more than
3,000 square miles, with $111 million of electric
infrastructure that serves 32,138 members.
And yet, in 2015 VEC was able to provide its
services without a rate increase, and none is
planned for 2016. VEC enacted a high but
necessary rate increase of 9.24 percent in 2009.
Since then increases have been remarkably
modest, with an average annual impact, from
2009 to 2015, of less than 1 percent.
On top of that, the Co-op was able to return
$500,000 in patronage capital to VEC
members in 2015, the third consecutive year
for such distributions. That brought the total
returns to members – in the form of electricity-bill
credits to current members, and checks
to former members – to $1.85 million.
A Holistic Plan for Your Co-op
While the President and Treasurer focused
their remarks largely on matters concerning
VEC’s financial stability, CEO Christine Hallquist
brought members up to date with the six
elements of the “Strategic Focus” that guides
the Co-op’s approach to its ongoing work and
provides consistency in its decisions for the near
and long-term future.
The first, “Safety and Security,” underlined
John Varney’s emphasis on safe work practices,
but the “security” aspect may have surprised
some Co-op members, who might assume
that a modest utility in a small state like Vermont
would have little to worry about regarding
hacking and cyber threats. To the contrary:
VEC has participated in cyber-security planning
with the U.S. Department of Energy, motivated
by the importance of protecting Co-op
members’ private information, and by concern
for the safety of the electric grid upon which
From the Floor:
Member Questions and Concerns at the Annual Meeting
At VEC’s Annual Meeting the Co-op’s officers and executives prepare reports on topics of importance to the Cooperative’s members. The unscripted part of the meeting is the question-and-answer
period at the end, when members have the opportunity to express what’s on their minds and get responses from CEO Christine Hallquist and other leaders of the Cooperative. Here are some of the
issues that members raised.
Jay Peak: With allegations of fraud recently raised by the U.S. Securities & Exchange Commission
against both the owner and the president of Jay Peak Resort, a VEC member asked, “Is the viability
of Jay Peak going the affect the viability of the Co-op?” Hallquist said that the news had come as a
shock, Jay Peak being VEC’s second-largest member (customer). She said the Co-op’s executives had
had “many discussions” with the attorney appointed by a federal court to run the resort temporarily,
but it was too early in the process to foresee the outcome. “Failure at Jay Peak would have a big impact,”
she acknowledged. “If we lost Jay Peak we’d have to make cuts. At this point, we’re optimistic.”
Capital Plan: With VEC entering the final years of its 10-Year Capital Plan, launched in 2009,
a member asked if another plan was in the works. The 2009 plan, when enacted, required a significant
rate increase, and the questioner wanted to know if the end of the plan might bring a rate
decrease. COO Jeff Wright noted that, “We are continuing to plan into the future.” CFO Mike
Bursell pointed out that the thrust of the 2009 plan had been to achieve reliability (fewer outages,
better performance) for VEC members, whereas a major consideration now was sustainability –
i.e., performing within the rate structure. Hallquist then made this candid observation about rates:
“A reduction is not realistic. The cost of infrastructure investment in New England is more than
the rate of inflation, and we’re affected by that. We face the same inflationary rate that you do.”
Net Metering. Hallquist and VEC President Tom Bailey had noted VEC’s concerns about the current
net metering program in their remarks. A member asked what a sustainable level of reimbursement
(given as credit per kilowatt-hour) for net meterers might be. Hallquist said that 20 cents/kWh,
more or less the standard rate in the state, “puts upward pressure on our rates.” For larger net metering
projects, a payment level of around 13 cents, over a 20-year period, would be sustainable, she said,
along with a requirement that net meterers pay their share of the costs for grid maintenance. She then
pointed out that only 40 percent of the net metering installations on VEC’s system were rooftop systems,
the rest being large, developer-driven projects beyond the scale of what a homeowner can use.
“If it was limited to rooftops we wouldn’t be having this discussion,” she said.
Microgrids: A member asked about the future of microgrids, which are small, self-contained
entities able to generate and distribute electric power to a localized customer base. Microgrids
can function on their own or retain connection to a larger utility like VEC. Said Hallquist, “We
see microgrids as having an important role in the future. It’s a migration away from centralized
generation to distributed generation.” Their compact size can enhance the effectiveness of renewable
power sources, thus lowering carbon emissions. However, battery storage would be needed to
make that feasible and the technology is still young and expensive. Although it will be a challenge
for utilities to incorporate microgrids, Hallquist noted that they can also provide an extra layer of
cyber security “by being able to sectionalize more and more parts of the system.”

Vermont Electric Co-op Co-op co-op life
Summer Fall 2008 2016 –- Page 2 3
Annual Meeting Recap from pg 2
nearly all Americans depend.
“(Intruders) are looking for the weak
point,” Hallquist explained, “and we don’t
want to be that weak point.” Thus, the Coop’s
attention to detail in the small corner of
the grid that VEC controls.
It was in her discussion of the second element
of the Strategic Focus, “Financial Balance,”
that Hallquist mentioned a concern that was
also voiced by President Bailey: the issue of how
renewable energy will be paid for. A primary
concern is the structure of Vermont’s net metering
program, through which people with home
generating systems (usually solar) are compensated
through bill credits for surplus energy that
they channel into the grid.
Renewable electricity on the grid can serve
as a great alternative resource to reduce carbon
emissions from the transportation and thermal
(home heating and cooling) sectors, Hallquist
said. But programs like net metering which are
meant to further that goal need to be financially
sustainable for utilities and the customers whose
bill payments support them. Elements of the
present net metering program, which provide
credits at a premium rate for home generators
and enable people with productive systems to
“zero out” their entire electric bills, shift costs unfairly
to other members, Hallquist emphasized.
VEC is pushing the Public Service Board to rectify
those problems in the new net metering law
scheduled to take effect next January.
The other components of the Co-op’s Strategic
Focus are:
• “Keeping The Lights On” – providing
reliable electric service to VEC members and
continuously upgrading the facilities for doing
so. Hallquist mentioned important substation
projects in Alburgh, Newport, and Berkshire;
• “Member Focus” – continuing to meet
and exceed its goals for member satisfaction,
and adding more opportunities for interaction
between members and staff through social media
and “meet and greet” occasions. Hallquist
noted that a new VEC website is in the works.
• “Connecting Employees” – “We want
a workplace culture with as much diversity in
opinion as possible,” Hallquist said. An engaged
staff that feels encouraged to imagine, to
create, and to provide leadership is a staff that
ultimately benefits Co-op members by providing
valuable …
• “Innovation” – Vermont Electric has
become an innovative, resourceful utility since
the introduction of its Ten-Year Capital Plan in
2009 and the introduction of the “smart grid.”
Hallquist’s remarks demonstrated how that will
continue, with a new Clean Air Program aimed
at reducing carbon through assistance to maple
sugaring operations, encouragement of coldclimate
heat pumps, and incentives for electric
vehicles. One of the most interesting innovations
on the horizon for VEC will be an energy
storage pilot project, testing out equipment
designed by Aquion. Energy storage on a large
scale is one of the great breakthroughs needed
to fulfill the promise of intermittent renewableenergy
sources (wind and solar) in a future that
will relegate carbon-based sources to the annals
of history.
VEC’s 78th Annual Meeting of the Membership
adjourned on time, shortly before
noon. People stuck around, however, for the
customary door prize raffle, which featured
contributions from so many companies that
lots of Co-op members left toting new gadgets
to enjoy in their homes. They had also done
their duty as members of an electric cooperative,
staying in touch with their Co-op, posing
challenging questions to its leaders, and exercising
their right to elect Board members whom
they expect to serve them conscientiously.
That’s a benefit enjoyed uniquely by the member/customers
of an electric cooperative.
Finally in a Good Place from pg 1
development grant that funded the NEK
Connector project, which rehabilitated some
of the oldest distribution and transmission
lines in VEC’s system, while installing 40 miles
of fiber-optic cable that will enhance digital
communications for residents and businesses
in the Northeast Kingdom.
VEC, Wright added, has also embarked
on an era of “partnerships,” leveraging capital
from other organizations that invest in VEC’s
system. He cited the $35 million rehabilitation
of VEC’s transmission and substation facilities
between Lowell and Jay, mostly paid for by
Green Mountain Power to distribute energy
generated by Kingdom Community Wind to
the statewide grid.
The fruit of these efforts, Wright summarized,
was that VEC is now far more
able to “keep the lights on” for members.
That can never be a guarantee for any electric
utility, a business sector inherently susceptible
to the whims of nature. But every
trend, including VEC’s best-ever rate of
just 1.89 outages per member in 2015, attests
to this accomplishment.
“I want to thank our Vermont regulators,
who held our feet to the fire in 2007,” Wright
said. “And I want to thank our employees,
who took a voluntary pay freeze in 2010-2011
so we could sink our teeth into rebuilding.
“And I want to thank you, our members,
for your patience,” he concluded. “I can finally
stand up here and tell you that we did what we
said we were going to do. I think we’re finally
in a really good place at VEC.”
Net Metering in Vermont
Where We Are and Where We're Going
For the past few years, the state of Vermont has been debating
the role of net metering in achievement of our renewable
energy goals. Net metering is the program that allows people
to install small-scale, renewable generation such as solar panels
on their properties. With the cost of solar installations coming
down and generous incentives at both the federal and state levels,
the program has grown rapidly over the past few years. At VEC,
we see an important role for net metering in helping the state
meet aggressive renewable energy goals. However, we are also
concerned about the cost of the current program as more and
more Vermonters take advantage of it. We believe the need for
renewable power should be balanced against the imperative to
keep rates stable.
Under the current net metering program, utilities are required
to pay a “solar adder,” which means that utilities must pay either
19 or 20 cents per kilowatt-hour for net metered solar power, depending
on the size of the project. The state put this above-market
incentive in place in 2011 to spur the adoption of solar in Vermont,
and that strategy has worked well.
Not only small-scale, homeowner-sized systems can take advantage
of these highly favorable rates; commercially-operated
“community solar” arrays up to 500 kilowatts can also be developed
under the net metering program. A 500-kilowatt system
is roughly 80 times the size of a typical home installation. Since
2014, these types of projects have popped up across the state, and
they make up about 2/3 of the net metering capacity VEC had
available for 2014-2016. Projects of this size can be developed
under another state program called Standard Offer; however, the
rates of compensation under Standard Offer are much lower.
A robust discussion has been taking place at the Public Service
Board for the past year and a half about how to craft a new
net metering program starting in 2017 that would provide sufficient
incentives to continue a healthy rate of solar adoption
while minimizing the impact on electric rates. VEC generally
supports the approach the Public Service Board took in its last
draft, released at the end of June. It keeps incentives high for
small-scale solar installations as long as the customer chooses to
transfer the Renewable Energy Certificates (RECs) to the utility.
These RECs will be retired to help meet the state’s Renewable
Energy Standard, which requires each utility to have a certain
portion of renewable energy in its portfolio. The new rule would
also require customers to pay certain charges each month such
as the customer charge, which helps cover the fixed cost of maintaining
the grid, and the energy efficiency charge, which pays
for efficiency programming. The draft rule would also require
that large projects be located on favorable sites, such as rooftops,
gravel pits, and sites the town has designated for renewables.
We believe that these changes move the net metering program
towards a more sustainable program that can continue
into the future without a major increase in electric rates. The
proposed changes address three key concerns.
First, the net metering program is meant to be a renewable energy
program, and legally, solar, wind, hydro and other renewable
energy sources can be considered renewable only if the energy still
has the RECs associated with it. These RECs can be stripped from
the energy and sold in order to help utilities meet their renewable
energy requirements or help towns, institutions, businesses,
and individuals make renewable energy claims. Often, when you
see a business, utility, or person say that they use 100% renewable
power it is because they have purchased enough RECs to cover
their usage; it is not because the actual electrons flowing to their
appliances are from 100% renewable sources.
Under the current program, Vermont utilities pay premium
rates for net metered energy even though they usually do not
receive the RECs and therefore cannot consider it renewable energy.
Essentially, we are paying highly incentivized, “renewable
energy” rates without actually receiving renewable energy. This
problem has the potential to drive up costs for all ratepayers in
the state.
The Public Service Board addressed this concern by creating
a 3-cent per kilowatt-hour adder for net metering customers
who choose to transfer the RECs to their utility, which will then
be retired to help the utility meet its renewable energy requirement.
Customers who choose to keep the RECs would receive
3 cents less per kilowatt-hour.
The second concern that the new rules address is the issue
of how to pay for the cost of maintaining and upgrading the
electric grid. Net metering customers still use the grid essentially
100% of the time, either to send excess power to the grid or to
receive power from the grid when the sun isn’t shining. In almost
all cases, if there is an outage, net metering customers will also be
out of power (the exception is systems that have a battery backup
and where the service can be isolated from the grid in the event
of an outage). For a VEC member, in the winter months, less
than 20% of the energy used by a home with solar panels will
be solar; the other 80% must be supplied by the grid. In the
summer, about 60% is on-site solar, and annually slightly less
than half of the electricity is supplied by on-site solar and slightly
more than half is supplied by the grid.
These figures highlight the extent to which net metering
customers still rely on the grid and why it is critical that net
metering customers continue to pay to support the grid. The
new proposed rule would require customers to pay charges that
are already charged to all customers such as the fixed customer
charge and the energy efficiency charge; these charges could no
longer be zeroed out with net metering credits. This change will
help address the issue of how we pay for all the services needed to
support the electric grid and the state’s highly successful energy
efficiency program.
Last, the new rule steers large projects to preferred sites such
as rooftops, gravel pits, brownfields, and sites designated as good
locations for renewables in a town’s plan. This change would limit
the proliferation of large solar projects on farms, fields, and forests.
These projects could still be developed through a state program
called Standard Offer, which sets a much lower price for solar than
what is offered under net metering. Requiring large projects to
be located on favorable sites will also help keep space in the net
metering program available for smaller projects. In 2015, VEC hit
its maximum capacity for net metered solar because we had several
large projects apply and fill up the program.
We are hopeful that we can move forward with the rules
the Public Service Board is proposing without another round of
significant changes. These rules represent a compromise among
all parties involved and a common sense accounting of the economic
and infrastructure challenges that we face as we incorporate
more renewable energy into the Vermont electric grid.
Once the 2017 net metering rules are finalized and the Public
Service Board opens the application process for 2017, VEC members
can apply to install a net metering system in 2017. We currently
have a list of members interested in being notified by email
when the application process opens. If you are interested in being
added to the list, please email support@vermontelectric.coop.

Page 4 - Summer 2016
co-op life
Vermont Electric Co-op
Vermont Electric Co-op Fall 2008 – Page 2
VEC Welcomes New and Re-elected Board Members
Rich Goggin, South Hero
elected to represent District 7
Ken Hoeppner, Jeffersonville
re-elected to represent West Zone II
George Lague, Derby
re-elected to represent East Zone I
New Board Officers
Dan Carswell, Franklin
President
George Lague, Derby
First Vice President
Carol Maroni, Craftsbury
Second Vice President
John Ward, Derby
Treasurer
Mark Woodward, Johnson
Secretary
Thank you to Tom Bailey
for your many years of service as
Board President! The Co-op is deeply
grateful for your leadership and your
continued service on the Board.

Vermont Electric Co-op Co-op co-op life
Summer Fall 2008 2016 –- Page 2 5
VEC’s Co-op Community Solar Is
Breaking Ground This Summer!
Later this year, VEC's first Co-op Community Solar project will be coming
online. The one-megawatt project in Alburgh will be available for co-op
members to sponsor panels and receive credits back on their bills.
What is community solar?
Community solar is a solar facility that produces more power than a single
home or even a few homes can use. Participants in a community solar program
can sign up to receive bill credit for the power that the solar array produces.
VEC’s first community solar project will be located in Alburgh, VT. It is a onemegawatt
facility, which will produce around 1.57 million kilowatt-hours a
year, enough to power over 150 homes. VEC’s first community solar project
can accommodate at least 100 participants, depending on what sponsorship
level participants choose.
Members can participate by making an upfront payment to sponsor the array, which helps pay for the cost of putting more solar power onto the
electric grid. Participants will then receive a monthly credit on their electric bills for either 10 or 20 years, depending on which sponsorship term they
choose. Members can participate from just a small amount or can sponsor enough to cover their annual electric charges.
How is community solar different from the rooftop solar I see around Vermont?
Community solar offers an option for people who don’t own their home or don’t have a suitable site because of shade or the direction of their roof.
It is also available at smaller sizes for participants who want to support solar but don’t necessarily want to pay the full cost of an array on their property.
In addition to greater flexibility in size and startup cost, it also offers greater flexibility if the participant decides to “opt out” of the program.
Participants can sell their sponsorship back to VEC at any time and for any reason. Members who opt out will receive a portion of their initial
payment based on how long they have participated in the program. This flexibility provides participants with reassurance that if they move out of the
VEC territory or simply change their mind, they can receive a partial refund (See buyback tables for details).
How much power will the project produce?
The Alburgh project will produce around 1.5 million kilowatt-hours a year, enough to power over 150 homes. VEC's first community solar
project can accommodate at least 100 participants, depending on what sponsorship level participants choose. We expect additional VEC community
solar projects to come online in 2017.
Sponsorship
period
How much does it cost?
Participants would make a one-time payment, either directly
or with a loan. See payment and credit details in the
chart to the left:
Will the solar credit change month to month?
No, the credit is fixed and guaranteed to participants. The credit amount is based on a guaranteed generation per panel and VEC's value of solar.
VEC guarantees that participants will receive this credit for as long as they are sponsoring panels.
Is financing available?
To participate in the program, you must make an upfront payment. You can finance this independently or use the financing option VEC
has developed with NeighborWorks.
The NeighborWorks loan has a 10-year term at an interest rate of 4.99%. VEC is offering an “on-bill payment” option for the NeighborWorks
loan so that members can pay their loan as part of their monthly VEC bill.
How many panels should I sponsor?
The minimum number of panels a participant can sponsor is one. The maximum is the equivalent of the member’s annual charges (see
10- and 20-year program tables for cost and credit details), or the program maximum, whichever is smaller. The program maximum is 67
panels for the 10-year program, or 60 panels for the 20-year program.
For example, if your average monthly bill is $100 and you want to offset all electric charges in the first year, you could sponsor 37 panels
for 10 years, which would be an upfront cost of $8,685.75. The total credit you would receive over the 10-year contract would be $12,076.80
for a total savings of $3,391.05.
Am I better off doing a 10 year or 20 year sponsorship?
The difference is that for the same upfront payment, a 10-year sponsorship offers a larger monthly credit for a shorter period of time and the 20-year
option offers a smaller monthly credit but for a longer period of time. For example, see the chart below for the monthly, annual, and lifetime credit amounts
for an upfront payment of approximately $6,500. You can also see the differences in the number of panels and the associated annual kWh generation.
Panels
28
(10 year option)
16
(20 year option)
Cost per panel
Generation credit
per panel
10 years $234.75 $2.72
20 years $412.54 $3.12
Annual Guarenteed
generation
(kWh)
Generation
on Value
(per kWh)
Payment
Monthly
Credit
Annual
Credit
Total Program
Credit
Total
Savings
5,336 $0.1714 $6,573.00 $76.16 $913.92 $9,139.20 $2,566.20
2,974 $0.2014 $6,600.64 $49.92 $599.04 $11,980.80 $5,380.16
Is VEC selling the Renewable Energy Certificates (RECs)?
Renewable energy projects such as solar and wind farms have something called Renewable Energy Certificates (RECs) associated
with them. RECs are the claim to the renewability of the power, and, for any renewable generation, they can be retired or sold. If they
are sold, the energy is no longer considered renewable because its RECs have been sold to another entity so that that entity can claim
the renewable attributes.
VEC is not selling the RECs for the portion of the project sponsored by VEC members. These RECs will be retired and will
help VEC meet the goals and requirements of Vermont’s Renewable Energy Standard, which was established in 2015 by Act 56.
Update from the 2016 Legislative Session
Renewable Energy Siting
and S.260
(An Act Relating to Improving the
Siting of Energy Projects)
This past legislative session the issue
of siting of renewable energy facilities was
a focus of attention for the Natural Resource
and Energy Committees. They
heard a range of opinions about how the
state should regulate the siting of renewable
energy, what financial and regulatory
incentives should be provided, and the degree
of local control in these decisions. The
legislature initially passed S.230 which was
vetoed by Governor Shumlin and then
came back and passed S.260 during a veto
override session held on June 9th.. The
Governor quickly signed S. 260 into law.
Some of the key elements of this new law
include:
• Integrated energy siting and land
use planning. It allows towns and
regional planning commissions to
receive “substantial deference” in the
Act 248 permitting process if they
implement enhanced energy planning.
• Provided $300,000 in funding for
the regional planning commissions
for energy planning.
• Created interim sound standards for
new wind projects until new rules
about sound are adopted by the
Public Service Board.
• Directed the Public Service Board
to create rules for maintenance of
aesthetic mitigation and decommissioning
of renewable energy facilities.
• Created a one-year pilot project to
set aside a portion of the standard
offer renewable energy program for
projects sited in preferred locations.
VEC has started meeting with representatives
of the Regional Planning
Commissions to review the legislation
and to determine how we can best support
each other to implement our respective
responsibilities. Please contact
us if you would like to learn more about
these initiatives.
SmartHub
Features
Pay Bills Online
Pay with a check, debit card or
credit card with no fee
Receive alerts when your bill is available
Schedule payments
Going paperless saves money and helps
the environment
Explore Usage
View usage and weather trends by month, day
or hour
Detailed look at your past and current
usage all in one place
Compare average temperatures
and in home usage with easy to
read graphs
Outage Information
Report outages
Receive alerts on your phone
when an outage occurs
Track the outage until the power is restored
Go Mobile
Download the SmartHub
app to your phone for
on-the-go tracking!
What if I change my mind or move? Will I get my money back?
Yes, participants can opt out of the program at any time. Those who opt out will receive a portion of their initial investment back, depending on
how long they participated.
How do I enroll?
Stay tuned, enrollment will open later this year! Email communitysolar@vermontelectric.coop to receive email updates.

Page 6 - Summer 2016
co-op life
Vermont Electric Co-op
Vermont Electric Co-op Fall 2008 – Page 2
Keeping Cool with Heat Pumps
from efficiencyvermont.com
A heat pump is a sophisticated air conditioner that can also heat your home
or business in the winter.
“Heat pump”—the name alone can cause confusion, because a heat pump
is first and foremost an air conditioner (AC). In fact, heat pumps and ACs
cool the same way: by using electrical energy to move heat from inside to the
outdoors. But a heat pump has a switch that lets you change its function from
cooling to heating in winter—all with the press of a remote control button. And
it’s far more efficient for cooling, using less than 50% of the energy of a typical
window AC unit.
Types of heat pumps
Why "mini split"?
Basic components
Heat pumps extract heat from (and move it to)
different sources: air, water, or ground. Ductless
air-source heat pumps (a.k.a. mini-splits or coldclimate
heat pumps) are the most common type in
homes and small businesses—though if you have
existing ductwork, a ducted system is an option.
“Mini” refers to the system’s small size—and
“split” tells you it’s made up of two distinct parts:
an indoor air-handling unit and an outdoor compressor
unit. The term “multi-split” or “multi-zone”
describes a system with multiple indoor heat pump
units connected to one outdoor compressor.
Unlike central AC, a heat pump’s outdoor condenser
coil can switch roles, acting as an evaporator
when in heating mode. The heat pump’s indoor
unit holds the electronics that allow it to switch from
cooling to heating, while a “line-set” running between
the two units houses refrigerant tubing and
electrical wiring.
How to compare energy costs
Both ACs and heat pumps use electricity to cool, but heat pumps are
much more efficient—which means real savings for homes and businesses
that choose to cool. They’re also highly efficient for heating: You can generally
save up to $600 per year if you switch from fuel oil, kerosene, propane,
or electric resistance (based on long-term average fuel prices). If you
currently use natural gas, wood, or pellets, a heat pump may not lower
your bills—because the low cost of those fuels can offset the efficiency
gains of a heat pump.
Another benefit to heat pumps is their compatibility with solar and wind
power. For Vermonters looking to move away from fossil fuels, heat pumps
may be a way to help get there.
How to compare efficiency
EER, SEER, HSPF, COP—each one measures energy efficiency in a different
way, so it’s not always easy to compare heat pumps with other systems.
The bottom line: It’s safe to assume that heat pumps are more efficient
than other systems for both heating and cooling, with the caveat that heating
efficiency doesn’t always equate to savings. When comparing among
heat pump models, look for a higher HSPF (more efficient heating) and a
higher SEER (more efficient cooling). If you choose one that qualifies for
an Efficiency Vermont rebate, you can rest assured that it’s been vetted for
energy efficiency.
Air conditioning vs. heat pumps
Each has pros and cons, but heat pumps enjoy some notable advantages
over central and window air conditioning. The biggest is that you
can cool and heat with one system, though a backup heating source is
still recommended for the coldest of Vermont winter days. Heat pumps are
professionally installed once, so you don’t have to remove or reinstall them
seasonally. They need just a three-inch hole in the wall for the line-set,
which means better security compared with window units that leave your
home vulnerable. And they have no ducting to install and keep clean, as
with central AC.
More key benefits:
• Quiet operation
• Zone cooling and heating
• No ducting required
• Flexible placement of indoor unit: ceiling, floor, or wall
• Flexible placement of outdoor unit: easy to keep out of view
• Renewable compatible: heat and cool your home using
electricity generated by your solar panels or wind turbines
• Modern, low-profile appearance
Other considerations
Besides needing a backup heating system on the coldest winter days,
heat pumps come with other considerations. Consider your layout when
weighing a purchase. A more open floor plan will be easier to cool or heat
with a heat pump (and provide more savings) than a space with small/
tight rooms. And be sure to carefully consider system size. If you size only
for summer cooling, you may find the system can’t deliver the heating you
need in winter. And, finally, while they typically lower your energy bills, the
units themselves are expensive, about $4,000 apiece. Because they save
energy, however, heat pumps do qualify for rebates from Efficiency Vermont,
as well as energy efficiency financing.
For help determining if a heat pump will lower
your energy bills, contact
Efficiency Vermont
at 888-921-5990 or visit
www.efficiencyvermont.com

Vermont Electric Co-op Co-op co-op life
Summer Fall 2008 2016 –- Page 2 7
CEO Update from pg 1
“Do we know where we’re going?” A well-defined mission helps employees understand why they do the work
they do and lays the foundation for greater autonomy in their work since they know where the
business needs to go.
The next focus area is Involvement, or “Are our people aligned and engaged?”
Employees who are highly involved in their work feel a sense of ownership that
strengthens their commitment and helps them identify areas that can be improved
and increased their ability to direct themselves.
Next focus area is Adaptability, or “Are we listening to the members?”
Being able to adapt to the changing utility landscape and respond to
what members want will be critical to the co-op’s future success. For
VEC to keep its members satisfied while working collaboratively
to meet the State’s renewable and carbon reduction goals, this is
critical.
The final focus area is Consistency, or “Do our processes create
leverage to get our work done well?” Consistency is the last step
in creating a high-performing organization, once you’ve defined
and communicated your mission, developed a highly involved
workforce, and put practices in place to ensure an adaptable
business model.
Excellence in the areas of Mission and Adaptability will
help VEC respond to changes in member needs, technology,
regulation, and legislation. Excellence in Involvement and Consistency
will help VEC have the best internal culture, bringing
out the best in employees and processes.
Excellence in the traits of Adaptability and Involvement will
help VEC remain flexible, while excellence in Mission and Consistency
will help VEC to be stable and predictable. This balance is what
members, regulators, and our financial institutions are looking for.
VEC, as well as any business, is driven by its beliefs and assumptions.
Those are core drivers in what makes us who we are. Leadership establishes
beliefs and assumptions through how we behave and interact. I speak for myself
and everyone at VEC when I say we are highly committed to our members and our
future. The Denison Culture model has helped us considerably in focusing our efforts, as
well as our learning.
Summer is here, and at VEC that means we’re keeping an eye on the
temperature. Because of air conditioning, New England’s demand for
electricity peaks during the summer, and the single hour in the year when
demand is at its highest determines many of our costs for the entire year.
That is why we’ve created the Beat the Peak program, which is voluntary
program that encourages members to reduce electricity usage during
peak times. These peak events typically happen on the hottest summer
days during the afternoon and evening.
Like other distribution utilities, VEC pays the transmission cost associated
with buying and delivering energy to its members. These transmission
costs are a large portion of VEC’s operating budget every year. Not
only does VEC pay to maintain its own transmission lines, VEC also pays
to use the transmission lines that make up the Vermont and New England
electric grids. The transmission costs are based on times when energy
consumption is at its highest or peak usage times.
When VEC predicts a potential peak, we will ask members who’ve
signed up for the Beat the Peak program to voluntarily turn off unnecessary
lights and appliances including dishwashers, washing machines, and
clothes dryers. The overall goal is to reduce energy usage during these
peak events. VEC members who work to “beat the peak” can help us control
rising costs that impact electric rates. Since VEC is a member-owned
cooperative, any money saved by VEC is money saved for VEC members.
Members interested in helping to "beat the peak" may sign up to receive
alerts by text, phone, or email during peak events. You can expect
to hear from us a few times a year. To enroll, visit our website or call
1-800-832-2667.

Volume 73 Number 3 Summer 2016
At the Johnson Elementary School Carnival in June, Safety Technician David Young and Member Service
Representative Lindsey Fenton talked to students about safety and demonstrated the equipment that VEC
employees use on the job.
Vermont Electric Cooperative Inc.
42 Wescom Rd.
Johnson, VT 05656
PRSRT STD
US Postage
PAID
Permit #1
N. Haverhill, NH
Vermont Electric Cooperative
Board of Directors
District 1 Don Worth 802-723-6532
P.O. Box 450, Island Pond, VT 05846
district1@vermontelectric.coop
District 2 John Ward 802-334-6022
145 Mt. Vernon St, Newport, VT 05855
district2@vermontelectric.coop
District 3 Carol Maroni 802-586-7758
2426 Collinsville Rd, Craftsbury, VT 05826
district3@vermontelectric.coop
District 4 Mark Woodward 802-635-7166
110 Woodward Rd, Johnson, VT 05656
district4@vermontelectric.coop
Inside Summer 2016 Co-op Life
CEO Update.................................................................................... pg. 1
Finally in a Good Place............................................................... pg. 1
Annual Meeting Recap.............................................................. pg. 2
Questions from the Annual Meeting....................................... pg. 2
Net Metering in Vermont.......................................................... pg. 3
Board of Directors Update........................................................pg. 4
Community Solar Is Breaking Ground.................................... pg. 5
Renewable Energy Siting........................................................... pg. 5
Keeping Cool with Heat Pumps.................................................pg.6
Beat the Peak................................................................................ pg. 7
CO-OP LIFE is published quarterly by Vermont Electric Cooperative
42 Wescom Road, Johnson, VT 05656 • 802-635-2331 • Toll Free: 1-800-VEC-COOP
www.vermontelectric.coop
Co-op Life Committee: Molly Lambert, Carol Maroni, Rich Westman,
Mark Woodward, Don Worth
District 5 Michelle DaVia 802-922-2537
71 North Rd, Westford, VT 05494
district5@vermontelectric.coop
District 6 Molly Lambert 802-868-4989
74 Nokis Rd, Swanton, VT 05488
district6@vermontelectric.coop
District 7 Rich Goggin 508-439-9166
30 Whipple Rd, South Hero, VT 05486
district7@vermontelectric.coop
Eastern Zone Tom Bailey 802-766-2647
Directors at large P.O. Box 114, Derby, VT 05829
eastzone2@vermontelectric.coop
George Lague 802-766-2456
308 Boulder Drive, Derby, VT 05829
eastzone1@vermontelectric.coop
Western Zone Rich Westman 802-644-2297
Directors at large 2439 Iron Gate Road, Cambridge, VT 05444
westzone3@vermontelectric.coop
Dan Carswell 802-933-4628
P.O. Box 802, Enosburg Falls, VT 05450
westzone1@vermontelectric.coop
Ken Hoeppner 802-644-5771
1685 VT Route 108N, Jeffersonville, VT 05464
westzone2@vermontelectric.coop