Thursday, December 17, 2009

PART III - Beartooth Member Editorial

See Parts I and II here and here.

This is Part III in a four part editoral series written by Arleen Boyd, a member of the Beartooth Vigilance Committee:
Rights and responsibilities go hand-in-hand for electric cooperatives
It’s been nearly a year since Beartooth Electric Co-operative members were hit with a steep rate hike, and some members still question the decision-making that led to the increase. This is the third in a four part opinion series exploring concerns about electricity rates, power generation, and the future of rural electric cooperatives. The final installment will run the last week of December.

By Arleen Boyd
Beartooth Vigilance Committee

Electric cooperatives have done a good job for rural America. They accomplished their original mission by bringing electricity to rural areas that were almost entirely without power before 1936 when the Rural Electrification Administration provided $100 million for rural power development (approximately $1.3 billion in today’s dollars).

Today, electric co-ops provide electricity to 42 million people in 47 states. Despite serving fewer customers per mile of line than other utilities, nonprofit electric cooperatives, for the most part, supply electricity at rates comparable to or lower than investor owned utilities.

Programs help electric cooperatives succeed

Cooperatives are owned and controlled by the people using their services. Unlike for-profit utilities whose mission demands a return for stockholders, nonprofit electric cooperatives receive government support because their sole purpose is to supply affordable, reliable power for members. Electric cooperatives are given legal advantages like:

•Nonprofit tax status that removes the obligation to pay federal or state income taxes.
•Low interest loans, loan guarantees, grants and program assistance from the Department of Agriculture’s Rural Utility Service (RUS)
•Very low cost (at cost) power from government supported providers like the Western Area Power Administration and Bonneville Power.
•Exemption from regulation by the Public Service Commission in Montana

Requirements for gaining the co-op advantage: Cooperative Principles

In return for these advantages and what amounts to an unregulated monopoly on rural electricity business in co-op areas like Montana, nonprofit electric cooperatives are expected to focus exclusively on their members’ need for affordable, reliable electricity; meet nonprofit business standards; and observe the cooperative principles.

The cooperative principles, universally acknowledged by co-op organizations across the country, are the criteria for nonprofit electric cooperative status.

•Voluntary and open membership
•Democratic member control – Cooperatives are democratic organizations controlled by their members, who actively participate in setting their policies and making decisions.
•Member economic participation – Members contribute equally to, and democratically control, the capital of their cooperative.
•Autonomy and independence -- Cooperatives are autonomous, self-help organizations controlled by their members.
•Education, training and information -- Cooperatives provide education and training for their members, elected representatives, managers, and employees so they can contribute effectively to the development of their cooperatives.
•Cooperation among cooperatives

Concern for community

How does Beartooth Electric Cooperative measure up?

Cooperative Principles – In recent testimony before the U.S. House of Representatives’ Agriculture Committee, Glenn English, CEO of the National Electric Cooperatives Association, emphasized that cooperatives are “closely regulated by their consumers” as they are owned and controlled by the consumers they serve.

In contrast, John Prinkki, Beartooth board president, says that the “control and regulation” belong to board members, that elected board members have the authority to make decisions, and that there is no obligation to consult with members or share information about board decisions.

Democratic control by members can only happen when members cast informed votes about issues they understand and for candidates who have made their positions and qualifications clear. Until Beartooth pays attention to principles numbered two through five, it will not meet the requirements for democratic control.

Beartooth policy requiring signed, witnessed requests for financial statements, which are by law public documents, is only one example of the co-op’s poor understanding of what democratic control is all about. Procedures for attending a board meeting or knowing what is on a board agenda are difficult. The Beartooth website provides no links to documents like bylaws or financial statements.

Members need information about issues facing the board, especially when major investments in a for-profit venture like SME’s proposed power plant are being made. Members can “actively participate in setting their policies and making decisions” only when the board provides opportunities for all members to review and comment on important issues like the bylaw revisions that currently are underway.

Affordable, reliable electricity? Beartooth Electric Cooperative charges may be the highest in Montana. Beartooth members pay 50 percent more per kilowatt hour than local NorthWestern customers.

Nonprofit cooperative business standards? Like for-profit corporations nonprofit organizations must meet business practice and ethical standards. Beartooth management says it is updating business practices and improving responsiveness to members.

Legal requirements for transparency and conflict-of-interest policies are crucial. Transparency is limited at Beartooth, so we do not know how issues like conflicts of interest are handled by the board. There is a potential for serious conflict-of-interest violation when the Beartooth board president who represents the retail consumer also is an officer on the Southern wholesale co-op board, and on the board of SME, the for-profit electricity supplier to the co-ops. Objectives conflict when SME needs to get the best possible price for its product; Southern needs a price that will maintain its operational margins; and the Beartooth retail co-op needs the lowest possible price for members.

The next article will answer these questions:

How do we improve cooperative democracy and business standards at Beartooth?

What sources of information can Beartooth members use to better understand their co-op and the issues facing the board?

Do members have any rights to information about decisions being made at Southern and SME?

1 comment:

Anonymous said...

Commission Bronson is certainly capable and articulate as pro tem, but it's attitude that's in question now and the 'Old Guard' still in denial.