Wednesday, August 30, 2006

GVEA board asks for G&T bylaws to be re-written

It was just 20 days ago that I posted a blog regarding the Interior Alaska electrical utility GVEA working to transfer its generation and transmission assets ($200 million +) to a separate cooperative composed of one member. I had concerns about this transfer effectively cutting out the existing membership of any involvement or control of this new cooperative GVEA G&T.

Since that time, at my request, I met with GVEA representatives to discuss my concerns and also at the regular GVEA board meeting two nights ago. I discovered then that the reps had brought my issues up with management (thanks!). I was told that Board and GVEA contract attorneys also discussed these matters. At this board meeting, there was an extensive executive session to which I was not privy, but when they came out, a couple of motions were made to instruct management to change the bylaws to read (I've not seen the exact wording yet): 1) GVEA board members will be the board of the G&T; and 2) GVEA members will have equal rights with regards to the G&T to what they currently have with their current cooperative. I think the board was distinctly discomfited with being potentially cut out of management of this new cooperative, thus item 1) above. Not trying for 2) would make for a difficult campaign to pass the membership vote over transferring those assets.

I have to admit to some amazement over the looseness of the existing G&T bylaws. They were created a number of years ago, but no one seemed to read them with any critical eye. I hope that this renewed attention to them will lead to better written ones. GVEA tends to be insular about their activities, but generally has seemed pretty detailed about procedural items. The current G&T bylaws don’t appear to have had much review. If this lack of attention to detail is indicate of the entire proposal, I am seriously concerned.

Once these bylaws are changed, we can return to the issue of whether or not transferring the members’ assets to this new corporation will be in the members’ best interests. Questions remain.

GVEA states it will allow a reduction in margin requirements of about $30 million which somehow will be returned to the members and that operation of this new corporation won’t cost any more than operating as a single cooperative.

1. I would like to see an honest cost analysis of operating this new corporation, from extra legal fees, changing letterhead, accounting, time-keeping, advertising, borrowing.
2. I wonder if this will give these two cooperatives a chance to borrow more money for projects that may or may not be in our long term best interest. We are already in the middle of an expensive series of projects: Intertie, BESS, 2 N. Pole power plants, a new BESS being discussed, substantive extra power requirements from such as Pogo and Delta-Greeley military operations, continued discussion over the Healy Experimental Coal Plant.
3. What kind of return will members actually realize in rate reduction?

Deadlines for submitting comments to the RCA are mid September.

I think that GVEA owes it to the membership to give more details to the membership about the deliberations leading up to this proposal. We see very little in past board minutes, which tend to be too general to be of much use. The only thing we saw was a one-sided proposal in the Ruralite which turned out to not be quite factual, as the board discovered after hearing my concerns.

It was rather odd experience to have my comments on the bylaws addressed in less than a month, though I don’t feel I earned any personal feelings of “winning” from their action. Rather the success is for doing the work of management and the board in reading through the details of what they were blithely establishing in their role of working for the membership of GVEA. I didn’t hear or really expect them to come out and say thanks, but will be happy if they realize that keeping the membership substantively in the loop can actually pay off with valuable input from informed members.


List of filings and orders:

Request for confidentiality:

Ruling on first set of issues:

Saturday, August 26, 2006

Campaign sign karma

I've been regularly annoyed over the years with the numerous campaign signs that are posted along state maintained highways in violation of state law, which requires a 300' distance. Part of the reason is the arrogance of campaigns that get away with violating the law that was established by those who were elected to office in the first place.

The Dept. of Transportation and Public Facilities notifies all candidates of the rules at the start of the campaign season and they will notify candidates of violations when they receive a complaint, giving the candidate 30 days to remove the sign. However, they don't appear to ever follow up.

This latest primary season was more egregious than others, with mostly large 4' x 8' campaign signs posted all over, some even hanging from cranes above major highways.

It was thus with some satisfaction that those two gubernatorial candidates with the most illegal campaign signs in Interior Alaska lost their bid for the Republican nomination. I wonder if karma had anything to do with?

Thursday, August 10, 2006

Golden Valley Electric Association asset transfer shorts members

Golden Valley Electric Association (GVEA), the Interior Alaska monopoly electric company is a cooperative under Rural Electrification (REA) standard. Yet there are times when the internal organization acts without fair consideration of the membership.

GVEA, in filing U06-060 and U06-069 before the Regulatory Commission of Alaska is proposing to transfer all generation and transmission assets to a new corporation called GVEA Generation and Transmission (G&T). The stated intent is to reduce margin requirements as the market looks at capital assets as tangible. GVEA estimates a long term savings of $31 million.

I have serious concerns over the composition of the G&T in that it cuts the GVEA members out of participation in the tangible assets of the cooperative. The only member of the G&T is the GVEA corporation, the board members are self selected. GVEA has stated that the GVEA board members will serve as G&T board members, but the bylaws do not require this. This arrangement is very loose and is both nepotistic within the corporation and does not allow for any redress by the membership of GVEA for any reason.

As constituted, GVEA cooperative members will be totally excluded from participation in either election of G&T board members and will be not be considered as members, thus not allowed to attend monthly or annual meetings of the G&T.

GVEA is very liberal with its treatment of executive session and confidentiality. I have sat outside GVEA meetings when the board forgot to get out of executive session. The minutes will not reflect anything in executive session.

GVEA cooperative members have pointedly and purposefully been excluded from being in either monthly or annual meetings of Alasconnect, a totally GVEA cooperative owned subsidiary, though other “consultants” have been allowed in. The rationale was that it was a competitive business entity and it was necessary to maintain strict rules regarding confidentiality of its operations. GVEA members, when asking, are given only vague and general information about assets and endeavors of Alasconnect.

GVEA has, in its filing with the RCA, requested confidentiality for some of the filings in its request for approval of the G&T. The RCA granted it only for detail, but not for summary. However, if GVEA transfers its tangible assets to the GVEA G&T, cooperative members will give up all rights to know anything about its assets in any kind of meaningful way.

GVEA’s assertion of a savings of $31 million is an estimate and should be validated by independent entities who have no stake in this transfer.

GVEA’s assertion that no additional staff will be required is curious, since productivity must go down for staff would would necessarily have to document more complex time allocation amongst the various subsidiary organizations. If this is NOT done, the defacto allocation between the two entities will be wrong and perhaps harmful to either of the entities. Bookkeeping and legal fees of an additional entity will cost more.

GVEA should provide more background on the development of this particular plan. Items of interest: other cooperative’s experience in doing this, including details of incorporation, organizational and legal cost of proceeding forwarding with this divesture of GVEA tangible assets to the G&T, a critical analysis of concerns in developing this plan. GVEA always provides a one sided positive view of any action which it submits to the membership. This does not allow for adequately and responsibly educating the members on an issue facing the cooperative. It is always external individuals or organizations that present any contrasting view.

To summarize, the G&T proposal gives up most of the cooperative’s tangible assets to an entity outside of member control. The proposal does not fairly state costs of establishment or state any risks to the membership. It leaves the members' cooperative as a mere shell dedicated to not much more than consumer billing.


List of filings and orders:

Submission of GVEA

Request for confidentiality:

Ruling on first set of issues: