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.

 

GVEA closed policies, G&T actions and more

The GVEA board met Oct. 23, 2006 and took action on a number of items, even if I wasn’t there (:-).

They approved the ballot to go to the GVEA membership. There are two ballot items, one to allow all but board members and spouses to participate in Alternative Energy programs (SNAP), where currently extended relatives and employees can’t. This isn’t controversial and makes sense for as many people as possible to participate in everyone’s best interest.

The second ballot measure is the transfer of GVEA power plants and hi voltage transmission lines to a separate company, GVEA G&T, that is run by GVEA (board and staff), not by the members. There was a motion approved to have the board of GVEA be the representatives on the GVEA G&T. The motion to approve this ballot measure and the vote on the bylaws themselves referenced in an earlier blog was 5-1, with board member Tom Delong on record opposing the G&T transfer.

An interesting aspect is that, now that the board took a vote in the affirmative, ALL board members are supposed to officially support it. This is in accordance to a board policy that was written to insure that the board appears to be all one big happy family to the public. They would likely say that they don’t want to be like other more fractious utilities in Alaska like Chugach or MEA.

This policy is very undemocratic and unhealthy, much like my view of some national administrations. GVEA will argue this is common for private companies, but GVEA is a quasi-public company that represents 35,000 families and businesses throughout Interior Alaska, more than the Fairbanks North Star Borough, the school district, and certainly any Interior city. Democracy can be messy, but the outcome of actions becomes better than under the veil of secrecy.

I’ve thought that this stifles the ability and responsibility of board members to communicate to their constituents. Even the MAC Committee, supposed to foster this communications, is pretty much just a small extension of the board. The membership as a whole remain cut out unless they actively jump in. GVEA doesn’t even list the MAC member contact info on the website. I asked for this list from GVEA, but got no response, as the posted list is out of date. Why doesn’t GVEA have a way for directors to communicate with their constituents? I’d feel claustrophobic as a director.

I was told that the last and only time the G&T company met was in July 2005, despite a requirement to hold annual meetings. The minutes are not publicly available as they haven’t been approved. Now that the G&T board is totally different, it seems odd to have people who weren’t present approving the minutes.

I’m told that Dwight Nissen, board member from Delta area district, resigned for health reasons. Nominations are already being taken.

 

GVEA bylaws for G&T formation ballot to members

At the GVEA special board meeting Oct. 16, 2006, the board tweaked their recommended bylaws for the G&T (Generation and Transmission) cooperative and approved sending the proposal to the GVEA members, with only one board member opposed. I’ve linked the final bylaws as well as my extended comments to the GVEA board.

The board will be taking this up one more time Oct. 23, 2006 to approve the ballot language and dedicating funds and hearing a staff plan for communicating this proposal to members. If it is to pass, it must be approved by a majority of GVEA members and at least 10% of our membership must vote.

As readers of previous entries realize, I am not in favor of this proposal and will vote against it. It really comes down to us member-owners of GVEA giving up our $300 million assets (BESS, Healy Power Plant, N.P. power plants old and new, and all our major and minor tielines to this G&T cooperative (of only GVEA) in exchange for the promise of reduced interest rates for the loans out on those assets that are to be transferred to the G&T. The implication is that our electric rates will be reduced by about $30 million over the next 5 years, but GVEA has said we probably won’t see rates go down, suggesting that they just won’t go up as much.

I think that the trade-off of possible reduced rates isn’t worth giving up control of our assets. The G&T will be controlled by a board that may have representatives of the GVEA Board on it, but I expect it to be weighted toward GVEA staff, as it is now totally composed of. I also believe that, as GVEA will be purchasing wholesale power from the G&T, we member-owners won’t have the transparency or input that we currently have, particularly with respect to the cost of power. GVEA will become a much smaller operation.

Some have suggested that this is an attempt for GVEA to get some of its operations out from under state regulatory authority (RCA). I believe that GVEA and most utilities would be happy to run their own show without the perceived interference of regulation. I also believe that these regulators help protect the members’ and public’s interests.

If you have read this far and follow the earlier links and blog entries, you can make up your own mind and be an educated member when presented with the glowing scenario by GVEA.

 

GVEA back to flawed bylaws of the G&T

I’m told that GVEA board has reverted back to the original flawed bylaws for the GVEA G&T and will formalize that vote at a special meeting Mon. Oct. 16, 3 pm.

Since this proposal doesn’t seem to be well thought out and they are plunging on ahead anyway, I’m thinking there must be some rush to do this, like a financial benchmark that they won’t meet, which will cost the utility more. They could then use the offset $30 mm to make up the difference and nobody is the wiser. Speculation on my part. Any comments?

 

Newman comments on GVEA G&T bylaws draft of Sept. 25, 2006

As I indicated in the previous entry, I did have some comments on the Sept. 25, 2006 draft of the bylaws. Here they are

And for the record, the RCA filings on the GVEA G&T proposal are on their website.

 

Sept draft bylaws GVEA G&T

The GVEA board reviewed some proposed changes to the bylaws of the G&T. So that I could give them a markup of my comments on those changes, they provided me a copy. It was a nice courtesy of them to do so, and also in their best interest as I still have substantive concerns on behalf of the GVEA membership that they should address.

The GVEA Board did have a special meeting on this draft on Oct. 3, 2006, but I have no information on any action taken

Draft G&T bylaws Sept. 25, 2006

 

Comments to the RCA on GVEA / G&T application

Below are my written comments to the RCA regarding GVEA’s desire to transfer its generation and transmission assets to a separate company, called GVEA G&T.

I didn’t have the benefit of any revised organizational structure which the board may have just received a draft. Since comments were due, I went with the facts as presented thus far to the RCA by GVEA / G&T.

Links to other documents filed in this case can be found in my blog entries from a month or two ago.

—
STATE OF ALASKA
THE REGULATORY COMMISSION OF ALASKA

Before Commissioners: Kate Giard, Chairman
Dave Harbour
Mark K. Johnson
Anthony A. Price
Janis W. Wilson

In the Matter of the Application Filed by GOLDEN VALLEY ELECTRIC ASSOCIATION GENERATION AND TRANSMISSION COOPERATIVE INC. for a Certificate of Public Convenience and Necessity for Authority to Provide Wholesale Electric Generation and Transmission Service to GOLDEN VALLEY ELECTRIC ASSOCIATION U-06-69

Testimony of Gary Newman
34 year member, Golden Valley Electric Association
1083 Esro Road,
Fairbanks, Alaska 99712
(907) 488-2001 gary@chena.org

Sept. 22, 2006

On June 29, 2006, Golden Valley Electric Association Generation and Transmission Cooperation (G&T) filed the above application, which is to enable Golden Valley Electric Association (GVEA) to transfer their entire transmission and distribution assets to this separate cooperative of one, itself, called Golden Valley Electric Association Generation and Transmission Cooperation (G&T).

The logical question of how a single entity can be a cooperative seems as odd as a single individual being tried for conspiracy (City of Chicago v. Bobby Seale 1969). However, I will assume this is legally possible in order to address the application itself and what it means to the member-owners of GVEA.

This G&T was created December 16, 2003 by GVEA staff. Bylaws and the Articles of Incorporation of the G&T were submitted to the RCA as part of the filing of U-06-069.

I have substantive concerns about this proposal as presented to the RCA and to the membership of GVEA.

1. Organizational structure of the G&T

A quick review of these documents revealed to me an almost amateur attempt to cut and paste some other organization’s documents without any apparent thought as to maintaining the connection of the GVEA board and membership to the G&T. There are numerous structural defects, confusing language, and more that would make it near impossible for GVEA membership to have any input or or the board any functional control over this separate entity to which several hundred million dollars of GVEA assets are proposed to be transferred.

I brought up a number of these issues in extended discussion with GVEA staff and also to the GVEA board of directors. At their most recent regular meeting, though not on the agenda, the board passed two resolutions. There is no formal record available yet to members, though I was present and attempted to clarify the motions with executive staff following the meeting.

The GVEA board resolved that the G&T board would be the same as the GVEA elected board. They also resolved that the membership would have the same rights and access to the GVEA G&T organization as the membership currently have with GVEA.

These resolutions don’t fix anything of course, as it takes the G&T board to make any changes to the Articles of Incorporation or Bylaws (with a bare majority vote, most unusual in my experience, as bylaws and articles of Incorporations shouldn’t be so easily modified). To my knowledge and after asking executive GVEA staff, there have been no meetings of the G&T and attorneys on retainer are reviewing the documents. They don’t expect formal changes to be made until late October or November 2006, too late for me to provide input, as comments to the RCA are due Sept. 22, 2006.

If the attorneys reviewing the G&T documents are the same ones that wrote the original ones, I remain seriously concerned that they can accomplish their assigned task in the interests of the membership. The board and GVEA staff had 2-1/2 years to review these documents before submitting them to the RCA and nobody appears to have had any concerns about them until I brought it to their attention. They seemed unaware of the specific contents as they asserted to the membership and the GVEA board (ref. Ruralite , for example, that the board of the G&T would be the same board as the ones that GVEA members elect, which was not the case. I thus request the right to submit further comments following submission of amended documents by GVEA and/or G&T in the matter of U-06-069. If necessary, I will file a formal petition.

GVEA is proposing to bring this transfer of assets before the membership in November 2006 in accordance with its bylaws Article VIII, Section 2. It is of course an easier bar to achieve by creating a cooperative to receive the G&T assets.

SECTION 2. Other Disposition
The Cooperative may not sell, lease or otherwise dispose of more than fifteen percent of the Cooperative’s total assets, less depreciation, as reflected on the books of the Cooperative at the time of the transaction, unless the transaction is authorized in the manner specified in this Bylaw. If the transaction involves a sale, lease or other disposition to another cooperative or to the State of Alaska, and otherwise conforms with the requirements imposed by State law, it must be approved by the affirmative vote of a majority of the members voting on the issue in an election in which at least ten percent of the eligible voters return ballots. If the transaction involves a sale, lease or other disposition to an entity other than another cooperative or the State of Alaska, and otherwise conforms with the requirements imposed by State law, it must be approved by the affirmative vote of not less than
two-thirds of the members voting on the transaction if the number of members voting to approve it constitutes a majority of all the members of the Cooperative.

I find that this is ill-timed because the membership will not have the benefit of all the comments by the RCA, the Public Interest section of the Dept. of Law, nor will all the relevant documents be available to the membership to allow adequate time for review or education. I ask that GVEA be enjoined from holding the required election under Section 2 until such time as the RCA makes a final ruling on GVEA’s application.

2. The operation of the GVEA G&T

GVEA has stated (Ruralite, board meetings) that the G&T will operate the assets transferred to them the same way that GVEA does now. There will be no difference in accounting costs and minimal legal expenses. They assert that GVEA members will realize a $31.1 million savings from reduced margin requirements when borrowing money. Despite requests, GVEA has thus far not been willing to say what members might realize in actual savings from this organizational change e.g. how much per kilowatt/hour. They indicate concern that members might actually expect this savings instead of realizing that the savings would just contribute to reducing future rate increases due to fuel increases (Bradish to Newman). This concerns me on several fronts.

Fuel increases are part of the “fuel adjustment surcharge” which is independent of the tariff and part of the wholesale cost of power, yet the application expects that GVEA would continue this responsibility. Maybe there is a way to work this out, but it seems odd.

Determination of the $31.1 million in savings was made by a consultant to GVEA, RW Beck, of which G&T submitted a one page summary as part of this application. There has been no validation of this. The RCA should request, review, and validate the background documentation and justification of purported savings to GVEA members in the interests of the membership of GVEA.

What major capital expenses would G&T plan beyond the current ambitious projects of new generation in North Pole, paying off BESS and the second Healy-Fairbanks tie-line, substantive extra power requirements from such as Pogo and Delta-Greeley military operations, and continued discussion (and potential financial investment) over the Healy Experimental Coal Plant that would tend to dilute any potential savings? Did RW Beck reflect any real world scenarios?

3. Regulatory challenges with GVEA members’ assets split.

While members have been generally very trusting of GVEA management and board in the past, this proposal by GVEA has some serious defects and raises a number of questions. I want to insure that the RCA will still be able to play a part in working with both elements of GVEA and G&T as seamlessly as GVEA purports the dual organizations will function. From two rate requests of 8% and simplified rate filing, I see attempts by GVEA to reduce regulation. While I recognize there is a cost to regulation, such regulation such as the APUC and now the RCA have played a valuable function in providing expert guidance to GVEA on behalf of the membership (most of the population of Interior Alaska) and the public.

GVEA indicates there will be no difference and the RCA has experience in dealing with this sort of a split organization. I would assume that the RCA can best make that determination.

GVEA members have the feeling that residential and small business consumers pay much more for electricity than the larger commercial/industrial consumers. I realize that the RCA has looked at this, as has GVEA. But to a certain extent, the cards are stacked against the smaller consumers when additional generation is needed (along with the loans required) due to new large commercial/industrial consumer needs. With this increased separation of the generation from distribution, will this make it more difficult to determine true cost by consumer class?

4. GVEA misrepresented facts about the G&T to membership

GVEA first presented a substantive discussion of this in the August 2006 Ruralite magazine sent to all GVEA members. In my view, there was a lot of non-factual material presented. I offer as Exhibit 1 the August 2006 Ruralite article.

a. The boards of GVEA and G&T would be the same (not the case at the time the article was written).
b. The board of GVEA was fully in support of the proposal. (I found no record of this in the minutes and it appeared to still be under discussion in executive session at the most recent board meeting.
c. If approved by the membership, the G&T would be operational by Jan. 1, 2007. This seems odd as this falls before the RCA is expected to rule on U-06-069. (”The commission will issue a ruling in this docket no later than January 2, 2007″). Not to quibble on a day, but presumably some bureaucratic details would need to be taken care of that might take at least a few days.
d. The only difference in operating a separate G&T will be reduced revenue requirements. I mentioned this earlier, particularly as more extensive legal costs will need to be incurred with power sales agreements needing to be approved, different office expenses from letterhead to timekeeping, differential filings for RCA, RUS, IRS, etc. The operation of two separate boards of directors (even if the same people) will take separate notifications, increased meeting costs for which board members are compensated. While they may pale in comparison
e. After the 5 years of estimated $31.1 savings, what then?
f. There have been, to my knowledge, no fall town hall meetings or any mention of this featured on the gvea.com website. I’m not pushing for them, as I think members need the benefit of the discussion that will take place in the course of the filing of U-06-069.

Conclusion

There are serious defects in the G&T organization that need restructuring and modification prior to approval by the RCA or by the membership.

GVEA and G&T will presumably be presenting some additional submissions and modifications to the RCA to try to rectify some of the structural defects of the G&T organization. Any such modifications will need to be reviewed by the RCA and by the GVEA membership.

Any vote of the membership on this proposal should take place AFTER the membership can benefit from the regulatory input and decision of the RCA Commissions, contributing RCA and Public Advocacy staff and public comment on record.

As I understand it, all of this effort on the part of the various utilities that GVEA indicates in its filing have gone through this effort could be avoided if the lender recognized the disparity in lending requirements. I would recommend that the utilities expend some efforts toward educating the lender, should this be an option, saving all these utilities from having to re-structure their organizations.

 

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.

References:

List of filings and orders: http://rca.alaska.gov/data/docketDetail.html?docket=U-06-069

Submission of GVEA 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

 

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?

 

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.

References:

List of filings and orders: http://rca.alaska.gov/data/docketDetail.html?docket=U-06-069

Submission of GVEA 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