GVEA G&T finally has bylaws - the Days of Their Lives

I attended the GVEA board meeting last night, followed by the second meeting of the GVEA G&T ever since its inception in Dec. 2003.

The GVEA G&T finally has bylaws adopted, the same board as the GVEA Board, and the same officers for now. The appointed CEO is GVEA CEO Steve Haagenson. One board member suggested me for the position - I wisely refused.

There was no discussion over G&T board or CEO compensation, though the board was adequately compensated by their workshop all afternoon and the meeting that went till after 10 pm. I think they received between $800 and $1000 each. They usually get $350 for a workshop and $450 per board meeting. That's over $100/hour. Plus good food.

During the GVEA board meeting board comments, concerns were expressed by staff and board about information that was out in the public about the G&T proposal. Staff felt like they'd been on a constant road show, but heard little back from members. Board directors felt like they'd received a lot of calls from members, some with what some felt was inaccurate information. Some seemed surprised and a bit perturbed. I'd opine that they should be pleased that members are calling on their district reps to explain the G&T proposal.

As far as inaccurate information, I can't speak for others, but I've certainly tried diligently to be accurate. CFO Grubich indicated I blogged that GVEA intended to sell the assets. I only repeated what he and Tom Irwin said is that they could sell the assets. Interestingly, with all the discussion about communications, they don't seem to realize that they are welcome to offer comments on any of my blog entries.

The Town Hall meeting earlier this month at Noel Wien Library was video recorded and one can download the video from the GVEA website. With a really fast connection, it will take at least as long as the meeting of 1 hour 40 minutes - it's 200 mb big. One of the directors commented he tried with his dialup and gave up. It was the first they'd heard of it. For all the great reputation GVEA has for quality IT support, I'm surprised nobody warned the PR folks about this.

One of the more entertaining parts of the meeting was a presentation given by Tom Staudenmeier, a former Matanuska Electric Ass'n board member from the early 1980's. He was lobbying for a regional utility, with Ross Perot's people (whoever they are) to come in and set it up. He was ready to put many utility managers and former legislators in jail as crooks, even Gov. elect Sarah Palin's father-in-law. Chair Bill Nordmark didn't enforce any time limit, so knowing that, I feel that there must be no time limit on member comments (not that I would ever so abuse). Some of the old history makes an interesting read

GVEA membership vote recommendations

Here are my recommendations for voting by mail. Of course, members should educate themselves before voting. The mail in ballot must be RECEIVED by 5 pm Dec. 11, 2006 at GVEA offices.

To read why I recommend voting this way, please read my Community Perspective in the Fairbanks Daily News Miner. The Newsminer has other GVEA articles and letters available

Ballot 2006

Membership Vote to Approve the Transfer of G&T Assets

GVEA should transfer generation and transmission (G&T) assets to the Golden Valley Electric Association Generation & Transmission Cooperative (GVEA G&T)

I Approve

X I Disapprove

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Amendment of Bylaws

Article IV, Section 3
[this change allows all but GVEA board members and their spouses to participate in GVEA sponsored alternative energy programs, such as SNAP]

X I Approve

I Disapprove

GVEA 2005 deficit and Healy Experimental Coal Plant

While GVEA members should have received their ballots in the mail about giving away $300 million of assets, more things are happening. Homer Electric Association is working with AIDEA, the state agency owners of the experimental coal plant in Healy, to get the plant restarted. GVEA is in mediation with AIDEA over access to the site, built on GVEA land. More info is available at www.chena.org/gvea.

GVEA has some concerns about making sure they stay in the black this next year and next, as they let themselves lose money in 2005. The stated reason was they had to pay back in December 2005 a few million dollars to members when only 5.88% of their 8% rate increase was granted by the RCA. However, they didn't say is that 1) the 8% was only initially allowed to be collected on an interim and refundable basis, and 2) they were told to give back the money in July 2005 by the RCA. GVEA thus had 6 months to cover the difference, but chose instead to fight giving back to the members what was due them, thus lost money. Another loss in a 3 year period and that puts them at risk for increased interest rates on loans. More about this on the link above.

I certainly like having electricity and am willing to pay a fair rate, but as a member-owner, would like to hear more than just than the one way spin. This is why I encourage regular and effective two way communication between member-owners and their board members. I've set up a separate blog to encourage comments at gvea.blogspot.com

GVEA members weigh in on G&T proposal

I've had a number of GVEA members contacting me regarding GVEA's proposal to transfer $300 million of assets out of the members' control. I received a fact sheet from some of them, who obviously spent some time on it. It is summarized below. You can view the entire document at www.chena.org/gvea/gt-info.pdf or on their website
www.savegvea.com

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GVEA Ballots Hit the Mail 11/20/06!
They should not be thrown out with the rest of your junk mail!

Ballot Issue 1 strips GVEA Members' voting rights forever
We Recommend: Voting NO on Ballot Issue #1, and YES on Ballot Issue #2

By a vote of its members, GVEA is proposing to transfer $300 million worth of power generation plants and transmission lines to a separate co-op known as GVEA G&T (i.e., Generation and Transmission). If Ballot Issue 1 is approved, the new entity would never again need GVEA member's approval for major decisions. Members would lose the ability to vote on matters related to power generation plants and transmission lines, features of ownership that have the greatest impact on our electric bills.

According to our review, numerous problems exist under GVEA's proposal. For example:

• The potential savings which GVEA claims under a G&T co-op are highly inflated. They are based on an “apples and oranges” economic comparison, rather than the financial criteria established by the Rural Utilities Service for loans to utilities.
• Currently, GVEA Ratepayers have the ability under the existing bylaws to intervene on bad decisions such as the Healy Clean Coal Power plant fiasco ($300 million total cost and still rising, which was partially funded by GVEA). Under the GVEA G&T Bylaws, we would have no direct say over a future ill-fated plan or decision.
• GVEA G&T Bylaws could be amended without the explicit consent of GVEA Members to allow:
• Expensive/controversial power generation and transmission projects that could only proceed with minimal public oversight (i.e., such as building a nuclear power plant or routing transmission lines through critical habitat).
• The sale or purchase of major power generation and transmission assets.

As concerned Members, we've made in-depth comparisons between the current GVEA bylaws, those proposed for GVEA G&T, and GVEA management's promotional claims. Our analysis is a detailed 2-1/2 page technical report that summarizes: a) how and why these worst case scenarios and many others could unfold, and b) additional problems embedded in GVEA's promotional materials, and c) the proposed bylaws:

Source Document Links:

• GVEA Bylaws: http://www.gvea.com/about/bylaws/
• GVEA G&T Bylaws: http://www.gvea.com/file/?id=gvea-g-and-t-bylaws---oct06.pdf
• Ruralite GVEA G&T Promotion: http://www.gvea.com/file/?id=nov-ruralite.pdf
• Ballot Issues for 11/20/06 Ballot: http://www.gvea.com/content/?id=gvea-gt&

GVEA G&T Documents and Resources

Probably time to take a look at the record of some of the official submissions thus far on GVEA's G&T proposal and what else is out there in the media.

Filings with the Regulatory Commission of Alaska

GVEA G&T initial request, lots of details (2 mb):
http://www.chena.org/gvea/u06069_1.pdf

List of filings and orders: http://rca.alaska.gov/data/displayDoc?docID=0703200612334127

Request for confidentiality: http://rca.alaska.gov/data/docketDetail.html?docket=U-06-069

Ruling on first set of issues: http://www.state.ak.us/rca/orders/utils/2006/u06069_2.pdf

GVEA G&T revised bylaws on the agenda to be adopted (or not) at Nov. 27, 2006 G&T board meeting

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Other media reports:

Dermot Cole, Fairbanks Daily News Miner

Ester Republic

Perspective on GVEA G&T

I attended the Healy and Delta Town Hall meetings that GVEA held last week regarding the G&T. Maybe a total of 8-12 people came to each meeting. With the input provided by attending members and the staff, I've prepared some talking points reflecting my view of this. I will say that, at these first two Town Hall meetiings, GVEA seemed at least willing to acknowledge some of the cons to this proposal.

Since that time, I've had other questions from GVEA members and I encourage anyone with question or comments make them in the comment section provided at the end of this blog entry. Just click on "comments" - they can be left anonymously or not.

The final Town Hall meeting will be at Noel Wien Library Auditorium in Fairbanks at 6:30 pm Wed, Nov. 15, 2006. Hope to see our member-owners in attendance, prepared to ask questions. I provide the following to offer my perspective to members in advance.

GVEA members asked to vote to give away $300 million of GVEA assets in exchange for $50 of savings per year and reduced capital credits

Ballots to be in mail November 20, 2006

If GVEA members approve this transfer, it is the last vote GVEA members will have on anything to do with these assets.

If approved, GVEA G&T can sell these assets whenever they want to any entity without any say by GVEA members.

If approved, GVEA members become more disconnected from having input on setting of rates, as the cost of purchasing and transmitting the power will be controlled by the G&T, not by GVEA.

If approved, GVEA members have no rights to call a meeting or elect the GVEA G&T Board of Directors. Directors of the G&T do not even need to be GVEA members or Alaska residents.

If approved, GVEA members will be even more shielded from knowing about the finances of G&T than they are with the finances of GVEA. GVEA members will be even further disconnected from decisions that affect them.

If approved, GVEA will be substantially reducing the capital credits program in the future.

GVEA members have no right to address the GVEA G&T Board of Directors (though may have the right to be present at meetings, if you can happen to find out when and where).

The GVEA G&T may choose to remove themselves from regulation by the only outside experts that look after the public interest, the Regulatory Commission of Alaska.

Discussion

GVEA is proposing to transfer all generation and transmission assets owned by GVEA member-owners to a new company called for short, GVEA G&T. This company is structured as a cooperative with only one member, GVEA, as represented by the GVEA Board. Approval of this proposal only requires 10% of the membership to vote and a majority of those voting to approve. You will see ballots in the mail after November 20, 2006. If approved, GVEA G&T could sell these assets, our power plants, tie-lines, and substations, whenever they want to any entity without any say by GVEA members. This proposal is complex, so let me try my best at an analogy.

As members of a condominium association, every condo owner gives title to their condo to the building manager for which they get a non-binding promise that the new owner will keep their rent down by being able to pay less interest on loans. The Condo Association directs the building manager, the condos can be sold without the residents’ approval. Complicated, yes. Does it make economic sense? Perhaps. GVEA says residential members might save $40-50/year each with this proposal. Is it worth giving away control of our assets? Personally, I think not.

IF GVEA members approve this transfer, it is the last vote GVEA members will have on anything to do with these assets. GVEA board members are not assured of a majority on the GVEA G&T. In fact the draft GVEA G&T bylaws only require 40% representation.

If approved, this will substantively reduce the capital credits program, as the margins now required and later rebated to the members will not be collected. This amount constitutes what GVEA calls a $30 million savings, but is not actual savings as this amount is now paid back through capital credits.

The model proposed for the G&T is unusual in that it is a co-op of only one member, something that occurs with only one or two other electric coops in the United States. It is possible that the G&T could choose to remove themselves from the regulation by the Regulatory Commission of Alaska (RCA) which examines utility actions in the public’s interest. This could further reduce members’ ability to decide on matters that affect our rates.

GVEA has other ways to save money, such as reducing administrative, travel, and legal expenses, equipment purchases, and less ambitious large projects. GVEA is known by the business community as always wanting things to be first class, but in lean times (GVEA lost money last year), businesses try to conserve.

While your cost of electricity has gone up dramatically partly because of increased fuel costs, GVEA has taken on a large number of expensive projects. GVEA members will have even less input into the G&T, though we will pay the cost of these projects by having to purchase power from the G&T. GVEA has actively solicited large power users such as Ft. Knox and Pogo Mines to buy from GVEA, requiring ever larger power needs. These all have been approved by your GVEA Board of Directors.

There is very little communication between GVEA members and their district representative. Some argue that GVEA members aren’t interested in their co-op except when $1000 prizes and free light bulbs are offered at the annual meeting. I’d suggest that, for all the talk about member-owners being represented by their board, the GVEA board could do more to engage the membership. All the communication you get are GVEA staff generated, such as the Ruralite, bill inserts, website, and other mailings. District meetings were abolished in favor of voting by mail for board. Why can’t board members be encouraged to meet with those they represent? While there is a Membership Advisory Committee, GVEA members have no contact information for these members and the MAC has no means to communicate with members in their district except one-one.

Ultimately, the choice on whether to give away the generation and transmission assets belongs to GVEA member-owners. GVEA must have the members’ vote – it is required by GVEA bylaws. But there is no turning back. If the members approve, these assets are out of GVEA members’ control forever. I intend to vote NO on Item 1 on the ballot.

Please note: Item 2 on the mailout ballot is to allow all but board members and their spouses to participate in GVEA’s alternative energy program. Since we want as many people as possible to participate, I recommend approval on this item only.