— by David Mieland —
[In the recent conversation about the ”morphing” of OPALCO], maybe I’m missing something, but I’m not under the impression that OPALCO’s venture into broadband is impacting electric rates much at all. We have seen small increases in kilowatthour rates related mostly to wholesale increases from Bonneville, and a larger increase in the basic charge related to infrastructure costs. OPALCO has explained each of these changes in detail, and I have accepted their explanations. I don’t personally have the time or inclination to delve into the financials, but would be interested in thoughts from anyone who has. Bottom line for me is that we still have very low overall electric rates here.
There’s no doubt that OPALCO’s board is making a major commitment. I think this will fill a huge need in our community and benefit everyone. The internet, and access to it, gets a little more important every day. You don’t have to use it directly to get benefit from higher speeds and greater penetration. All of the businesses and government entities you deal with are using broadband extensively (if they can get it) and they can be a lot more efficient with higher speeds. Take a look at who’s already connected to OPALCO fiber over here in Friday Harbor for a better picture of this. A huge number of kids are now assigned daily homework that they do online. I don’t drive on I-5 much, but almost all of the goods and services brought to me come over that highway, hence I am using it.
OPALCO has stated that they intend to make broadband a stand-alone entity that supports itself and pays back the investment made. I believe they can do it. I won’t be surprised if there are hiccups along the way, but my gut feeling is that it will work out well in the end, and that it will be a huge benefit, one that no one else is going to provide. There is enormous interest over here on San Juan Island, with entire neighborhoods signing up to have fiber installed. The folks who can afford to pay for this now will probably be footing the majority of the bill for getting this venture off the ground, and for that I thank them.
I have read comments in various places about how OPALCO is competing with private-sector ISPs. That’s fine with me. OPALCO is a member-owned rural co-op, and as such exists to provide goods and services at low costs to members. OPALCO is not the government. I would much rather buy from OPALCO than CenturyLink, and I shop at the food co-op and the farmer’s co-op too. What OPALCO is doing is perfectly fine in this regard.
Disclosure: my company has a small business relationship with OPALCO that has nothing to do with broadband.
David
Please do not interpret my words in the morphing article as being opposed to better Broadband in the islands. We were part of the original 900 who made a financial commitment in early 2013 to support OPALCO using its fiber optic backbone to support ISPs in delivering service.
My opposition is that OPALCO decided to move into a completely new and risky business venture without getting membership approval. There are real substantial financial and business risks here. Failure to achieve their objectives will be costly to the entire membership. The BOD could have and still could provide a real understanding of the total cost, the risks and potential rewards, along with the rates and construction contribution needs from members. Then the members could vote yes or no.
The existing BOD has either decided they know better than the members (so we should not be allowed to vote) or they are afraid that we will not agree with their plans.
Supposedly OPALCO is organized and aligned with the Seven Cooperative Principles (as per the OPALCO website) wherein it states.
” Democratic Member Control—Cooperatives are democratic organizations controlled by their members, who actively participate in setting policies and making decisions.”
So which is it. Is the BOD smarter than the rest of us or are they afraid that the majority would vote no on their plan when all the details were shared and understood by the members?
Don – Suzanne Olson with OPALCO here. The way democratic control works in our cooperative is that we, the members, elect our Board of Directors and they make policy. A membership vote is not required and very few decisions outside of board elections and bylaw amendments have been put to a vote of the membership throughout our 77 years. We, the members, can also participate in policy discussion by following issues published in board materials and attending board meetings. That said, the board is very interested in what our membership wants and needs and commits resources and staff time to get member input regularly. The 2014 member satisfaction survey provided key feedback and support for the decisions made this year. This culture of listening will continue with regular surveys and other tools to collect member input. I recognize how much information we are all exposed to – it’s hard to keep up. The best way to stay apprised of what’s going on at OPALCO is to sign up for our email newsletter – and you can do so online at opalco.com.
Don, I think your concern about financial risk is very well stated. I share that concern, but believe that “someone’s got to do something” about broadband, and that the risk is well worth taking. The risk if no action is taken is worse.
There was not a vote of the membership, as you point out, but the BOD has heard from a lot of people, myself included, that we want them to go ahead with this.
Hi David,
I thank you for sharing your subjective observations.
I have spent a lot of time looking at the financials and have attended 15 to 18 board meetings which is a commitment from 5AM to 5PM when I attend them on Orcas or Lopez and have to take the ferry. I can provide you with proof of how much this is costing the energy side in the form of cross subsidization and just plain making choices that are driven *not* by smart grid, but broadband for a minority of our members. I can do this using OPALCO’s own numbers. However, if you can’t be bothered with looking at financials of your own co-operative and you choose to believe what you are told by the Board, GM, and the OPALCO press machine then there is no amount of proof or logic that will dissuade you to change your thinking. But, you’ve asked for other’s insights so here goes.
What are the added costs to the grid side in simple terms?
We know from OPALCO’s 2015 budget that the grid side operating expenses are ballooning from $17.3 million in 2011 (just before the 1.2+ million broadband study) to a forecasted $27.5 million in 2019. That means every year we now need to collect electric power revenue in excess of an extra $10 million compared to 2011 just to cover the grid side expenses in 2019.
We know that OPALCO is anticipating raising the residential meter billings to include a monthly fixed charges of around $25.50 in 2012 to almost $78 by 2019 with little change in kWhr rate charges. Higher for commercial. So that is an additional $626 a year your household electricity meter bill will be charged in energy bills once we hit 2019 compared to 2011. That’s not counting the kWhr usage. Going out 10 years from there it will be $6,260 a decade, but I believe that it will go higher until they have fully built out the broadband burden being placed on the energy grid side.
I believe operating expenses are being built into our cooperative’s DNA unnecessarily.
I don’t know if you’ve noticed, but we have had 4 rate increases in less than 4 years that compound out to an effective 26% increase in electric billings. Only 2.9% of that was due to a Bonneville Power rate increase. Add in the 6% billing increases projected by OPALCO for the following 4 years and you get a total compounded increase of 59% by 2019. For many residents who use their actual billings as comparisons you will see that those claimed rate increases are slightly low when compared to their actual residential billings.
As I see it the board has repeatedly failed their fiduciary responsibility (old plan and this “new” one) to provide our member-owners with an accurate assessment of the risks involved with branching out into broadband. And not just the financial risks.
I would very much like to see proof that the board received a written opinion by an expert that the heavily subsidized use of our non-profit co-op’s backbone network will not jeopardize the non-profit status of our electric company. That is because its own for-profit subsidiary is competing against 3rd party broadband providers. Our 501(c)(12) non-profit status is in large part why our energy rates have been so relatively low until recently. As far as I can tell our broadband / telecom subsidiary does not pay for its use of the co-op’s backbone network. Yet the incomes it receives from the independent Internet service providers for the use of that backbone goes to and stays in the private subsidiary that threatens (literally) to put them out of business. To me it doesn’t pass the smell test and has the odor of unfair competition using the advantages of a non-profit’s plant assets.
I know there are numerous members in our co-op who so want better broadband / telecom that they don’t give a moment’s hesitation to how this cross-subsidization affects the 30 to 40 percent of the people in our county who struggle financially. If we as co-op owners allow a minority of interests and a small board to treat a significant segment of our members to suffer unnecessarily and disproportionately for our better broadband then we, I fear, have lost the very soul of what it means to be a rural electric cooperative.
But let those of us who want better broadband/telecom ask ourselves what is it we ultimately want. Don’t we ultimately want more competitive choice in broadband and telecom and a full range of content possibilities? OPALCO’s monopolistic approach won’t get us there. It won’t be the lowest cost provider when you factor in the cross-subsidized burdens placed on our energy side. Where OPALCO has helped to make significant impact on competitive choice can be seen in Friday Harbor where they provide wholesale broadband backhaul to Zito Media.
We only need look as far as Mount Vernon where their Open Access (Fiber) Network provides wholesale broadband to 8 retailers who deliver broadband and telecom subscriber services to the valley and Burlington at no cost to their municipality. You can listen here to learn about it: https://muninetworks.org/content/washington-mt-vernon-attracts-businesses-open-access-network-community-broadband-bits
Also, we only need to look at Bend Broadband (Oregon) who invested heavily into providing broadband and content to over 2,200 subscribers using wireless LTE broadband as our board wants to do. Despite their relatively flat terrain last June they jettisoned all of their wireless subscribers because it didn’t work financially.
The board of directors knows about these object lessons but still decided to create a retail broadband effort anticipated to cost millions in loans and $7+ million annual operational expenses and increase our co-op’s full-time employee count from 20 to 30. And what if that entity continues to lose money beyond the projected break-even date of 2021?
At the last board meeting I attended, the GM and several board members stated that “we have no exit plan.” But rest assured we aren’t going to go bankrupt, because they just need to reach even deeper into our pockets through our energy bills to cover those loses. That is what is meant when OPALCO says this broadband effort will be “revenue and expense neutral”.
While I respect our board members for their service I believe we need a significant change in our board of directors with members who understand the inequity and burden they are placing on a large segment of our population. We need a board who communicates clearly what the risks and costs are to our energy members.
I have been told by board members and our GM that those small time ISPs couldn’t meet our broadband needs and only OPALCO could do it. Now they are admitting through their purchase of Rock Island they were wrong. We need an open access network with a fair & even playing field that pays for the use of our backbone network and for us to stay out of the risky retail broadband / telecom business and focus on what we are chartered to do “providing electrical utility service that is efficient, economical and adequate for our members.”
Thanks Gray and Don for your input. I am one of those who are finding the regular rate increases difficult. Amen to your comments
Thank you Gray and Don. I am thankful for your considerable insights and for sharing your knowledge regarding this broadband business and OPALCO’s involvement in pushing it. I am in Steve Hopkins court and yours in thinking it inappropriate to our co-operative’s mission which is to provide economical electrical service to all members. This broadband business has huge financial implications which will seriously impact the entire membership in potentially very risky and possibly unaffordable ways. Going ahead with it should certainly be decided by the entire membership after all the implications are clearly on the table. Such a huge decision should not be made by just a small group of Board members.
Gray
Thank you for your thoughtful and detailed analysis of historical and projected OPALCO financials and what it means to the OPALCO Members.
It’s easy for OPALCO to get some community support when they use typical marketing slogans about fast, reliable broadband connections. Similar to rainbows, kittens and puppies, what’s not to like? The answer is the projected cost AND the risk that the costs to our members will go higher. In the end, there is no free ride. All costs incurred by OPALCO are going to be paid for by the Members one way or another.
As it stands, we the Members own 100% of the costs. They the BOD want to control 100% of the decisions. Is there something wrong with this picture?
One of the underlying issues is the reality that major companies such as CenturyLink have shown for years that they have no interest in providing infrastructure growth here in the San Juans, and small companies like Rock Island and Orcas Online don’t have the financial capability to do it. Perhaps one of the wealthier island residents, or maybe a group of them, could take this on, but to date none have.
Faster more reliable connectivity isn’t just about watching cat videos. Many business increasingly rely on a quality internet connection. Increasing numbers of people are able to make their living working from home via an internet connection. And yes, there is the ability to watch cat videos as well. David’s analogy to I-5 was a very good one. Not everybody needs faster broadband connection, but in the end everybody will benefit. I’m sure people without cars complained about tax dollars being spent on road improvements on the island many decades ago, as I’m sure that those without any electrical needs complained about Opalco in the beginning. Like any significant new infrastructure there are risks and costs, but there are benefits as well. Would you rather be living in the San Juans without roads, traveling only by walking or by horseback if you were wealthy; without electricity, using candles and a wood stove to cook; and without many of the conveniences that we now take for granted such as the ability to debate this issue while sitting comfortable in our easy chair drinking coffee while we type our thoughts into the internet?
We can argue till the cows come home as to whether it is appropriate or not for Opalco to enter this arena, but if we are ever to have improvements in internet connectivity it’s probably the only way it is going to happen.
Don asked the question: has the BOD decided they know better than the members and there is no reason for a vote, or are they afraid a members’ vote would not agree with their plans? Based on Suzanne’s response the apparent answer is yes to both.
As someone who is retired and anticipates living here in 2019 and well beyond, the facts & figures detailed in Gray’s comments regarding future costs to the members are disturbing. If someone from OPALCO disputes Gray’s information, perhaps they should respond and detail where he is wrong. But dispute with facts & figures, not generalizations such as “everyone will benefit in the long run”.
Suzanne Olson with OPALCO here. The fact that Gray fails to mention the enormous $15,000,000 submarine cable replacement when talking about the rate increase shows just how little he understands about OPALCO finances. Either that, or his glaring omission is intentional, and designed to mislead.
For those readers who want to learn more about the OPALCO budget and new rates, go here: https://www.opalco.com/find-documents/ and click on “Co-op Governance & Finance”, then click on “Quarterly & Budget Reports”, and in the folder labeled “2015” you will find four helpful documents: 2015 Budget Introduction, 2015 Budget Report, 2015 Capital Projects Budget, and the 2015 Budget and Rates Q&A.
As mentioned above, the main driver of the rate increase is the roughly $15,000,000 submarine cable that will replace an aging one that was placed in 1977. It runs between Lopez and San Juan. We encourage readers to explore the costs and revenue details. Explore the “Notable Drivers” section on page 15 of the budget report to see what’s really driving rate changes.
Serving 20 islands, OPALCO’s grid is one of the most complex in the nation – and one of the most expensive utilities to operate. Our system includes more than 30 miles of submarine cables built to withstand the harsh saltwater environment, storms and tidal surges for 40+ years. It costs about $800 per foot to lay a submarine cable – about 70 times more expensive than mainland aerial prices. And submarine cable costs have increased dramatically in recent years. On land, more than 85% of OPALCO cable is buried, for more reliable service. It costs about three times more to bury a cable than to run it above ground.
Despite the added complexity and cost of delivering energy in our beautiful island community, OPALCO rates are still a bargain compared to most of the nation. For a comparison, see here: https://www.opalco.com/wp-content/uploads/2015/02/OPALCO-Rates-and-Carbon-Intensity.pdf
OPALCO’s finances are independently audited and receive the highest ratings. Our financial documents are posted online for any member to review. As always, please do your own research and thinking on important issues such as these.
Gray Cope’s inaccurate and innuendo-laden comment appears to be an attempt to derail the rolling out of fiber optic broadband service in our county. It is reminiscent of the OPALCO board election last year, where some of the candidates ran on the platform of stopping OPALCO from making fiber internet available to its members. They all lost.
The community has been asking for OPALCO for help, for years, and the board has heard the membership loud and clear. Now, OPALCO/Rock Island Communications is engaged in planning and construction with dozens of neighborhoods, who are looking for relief from the “digital desert” that no other provider has been willing or able to address.
Have you seen the crews installing fiber around the islands? The build-out of a county wide fiber network began in November. It will take years, and won’t be cheap. But it will be invaluable.
On a personal note, in my neighborhood of 22 households, somewhere between 50 and 65 percent will likely sign up for Fiber service from the OPALCO/Rock Island. We have a mix of working stiffs, retired, renters, seasonal owners, rich and poor – the works.
While most want fiber, the construction cost to trench fiber through the neighborhood is tough to swallow. It’s like putting in electric or water. It can cost the average homeowner some serious bucks. Not all will go for it. Each ISP will find their niche in this new internet ecosystem.
Right now I pay CenturyLink $80 per month for mediocre DSL and one phone line. I am going to go with Fiber, but I am not going to take the $1,500 construction credit they offer. That way, I reduce the monthly cost for Fiber internet service to $60. Once installed, I will cancel both my CenturyLink DSL, and my phone service, and use my cell phone, which has wi-fi calling (cool T Mobile feature, very handy when you live in an area with no cell phone coverage) for telephone.
So I will have gone from $80 per month to $60 per month, and have much faster more reliable service than I currently have. But I will have to pony up some serious construction money. I might finance it with the low interest loan Islanders Bank is offering for this initiative. Either way, I figure the value of my house will increase by about $5,000, which will more than offset the construction costs.
Note: The views expressed here are my own. I consult for OPALCO on accelerating energy efficiency and community solar initiatives. For more on that, see: https://www.opalco.com/energy-savings
Hi Suzanne and Jay,
There has never been an attempt on my part to misrepresent anything OPALCO has presented. Jay you failed to mention what I inaccurately reported or what you found as innuendo. My comments here are primarily to respond to Suzanne.
We have had submarine power cables since 1951. We placed and replaced many over the decades. This is something the board and management are tasked with managing in a controlled way. Including maintaining adequate capital reserves to handle emergency repairs until financing can be put in place.
Several years back I was at a board meeting and saw a multi-year budget that showed $3.5 million being set aside in chunks of about $1 million per year with the final year having the cable deployment in 2015. I distinctly recall having a conversation during a break in the board meeting with our GM and telling him it seemed strange that the new cable was only 1/2 million more than it was estimated to cost back in 1995. See video clip here:
https://www.youtube.com/watch?v=LqAUo2IfXAs&t=1m40s
I was informed that the new cable was not to be oil-filled and accepted the amount was reasonable.
At a recent board meeting I attended someone asked if the board had set aside money for the cable crossing and was told “No”.
Interestingly enough that $3.5 million I saw budgeted several years ago for the cable crossing exactly matches what our co-op later released as the amount put into broadband expansions by about mid-2014.
In late 2013, in response to queries asking how the accelerated broadband plan would be financed, what were the risks to our co-op, and what would be the impacts on our electricity rates?
You responded “the November 21st board motion to accelerate broadband is revenue and expense neutral.”
This information has been publicized by OPALCO. A misinformed OPALCO member might have gotten the impression that there were to be no rate increases from the accelerated broadband effort. I believe this is partly why some of our members have claimed in print (as David did here in his editorial) that they are under the impression there are no significant increases due to broadband.
In the document you referenced, QA 2015 Budget and Rates, it claims the rates are going up because: “We are facing expensive submarine cable replacements beginning in 2015 and continuing into the foreseeable future. In addition, we have to make up for a $1.4M revenue shortfall in 2014
due to warmer temperatures and we expect the warming trend to continue.”
Elsewhere I think it was publicly stated there was around $7 or 8 million being added to the broadband effort (on top of the old $3.5 million). How about the millions being loaned to the new startup broadband retail business? Somehow these weren’t mentioned as notable drivers on our rate increases.
Are these not significant sources of the projected rate increases?
I totally understand why member-owners like David have a misperception of the effects of the broadband expansion on our electric billings.
We were told last June that a warmer than expected Winter had left us short on revenue. Yet, the board had just made a rate increase in March 2014 (claimed as 6 percent and the 3rd increase in as many years). Surely they must have known at that time there was a shortfall.
I could report numerous other such misinformation put out to our member-owners, but I think I’ve made enough of my point for now.
We also have to be aware that these rate increases aren’t one time limited assessments that eventually go away. Our residential rate increases so far revealed (2012 to 2019) add up to a 59% (compounded). They aren’t going away.
I would greatly appreciate it if our co-op would post our CWP (current 4 year work plan) so we can see the breakdown on the work down. As it stands the 2015 Capital Projects Budget spreadsheet that you referenced doesn’t have the sort of detailed information that a member can determine what is behind the SJI to Lopez cable lay.
The board has flip-flopped from claiming they would provide wholesale broadband to the retail ISPes. Then went to the big Plan that had them doing retail. Then admitted what they came up with was too risky and too costly and would enable ISPes with a wholesale approach. Then back to the retail plan competing against the ISPs.
The board has never cogently explained why they found the safer wholesale approach undesirable and went back a second time to a retail focused broadband plan that may only serve a minority of our energy members.
I have no horse in this race, no motive other than to see our co-op member-owners treated equitably and informed properly. I want broadband improvements, but not if it is at the expense of financial pain to 30% to 40% of our energy members. Many of whom won’t be able to afford or want OPALCO broadband. I want the free ride our broadband subscribers are being given on our co-op’s expanded backbone network to end. I want reassurances that this new retail for-profit is not going to jeopardize our non-profit status. These are the things that are motivating me to bring light to these subjects.
Awesome, Grey.!
I asked Gerry Lawlor how I could get hooked up to broadband when OPALCO came out with the $1500 offset to help with initial connection costs. There will also be a huge facility rate increase from $28.60 a month now to $74.70 a month in 2019 regardless of the amount of kilowatt hours used or whether or not you can even get broadband from OPALCO/Island Network/Rock Island. Gerry told me to get my neighbors on board because it would save money. Here’s the problem, besides the fact that I can’t afford that huge rate increase, I don’t live in a neighborhood, I am a renter not a homeowner (11 years at same address), and my landlord will not pay for broadband connection fee. I will be one of the working stiffs/poor paying for this along with everyone else only I will get nothing in return…..I get to keep CenturyLink as my ISP.
Darlene,
The monthly fixed amount on your residential energy bill is actually predicted by OPALCO to be $77.70 starting 2019, because they are adding a fixed “demand” charge of $3 regardless of actual demand.
As revealed in the document Suzanne referenced above (2015 Budget and Rates Q&A) the board has decided they want to replace our AMI (automated metering infrastructure) meters.
This is another expenditure that the board should explain the cost-benefits to our member-owners. They just finished installing 14,500 of our AMI meters in 2011! Now they are saying they must replace them.
Will the cost really pay off in being able to measure demand on smaller time intervals?
Or does it justify using wireless and fiber connections rather than communicating with our power meters using the power lines?
Years ago I encouraged the board to provide a clear message to our member-owners what their vision of smart grid use was. Back then we already regularly received high marks for our use of smart grid and the term itself has a wide range of meanings. I had the impression from their actions and discussions that they were using “smart grid” as one of their rationalizations for investing heavily in broadband / telecom infrastructure.
They are installing 256-fiber optic cables into our system. Trust me when I say smart grid doesn’t need anything close to that. Proof of this is that our smart grid link between San Juan Island and Lopez was handled by a 150 Mbps wireless link. No fibers no Gbps speeds. It handled all our smart grid and inter-office communications. These expansions are all being sized for broadband and telecom, but expensed to the grid side through your energy bills. Along Douglas Road on San Juan Island they are installing two fiber cables not just one and this is being charged to the grid side.
In fact one industry expert wrote that over 90% of rural electric utilities use wireless mesh networks to talk to their distant field equipment for cost-benefit reasons. There is a cost to each of those extra cables and fibers particularly when it comes to splicing and connecting them to expensive networking equipment. This increases the operating and maintenance costs.
All this is being charged to our grid side and not shared by the broadband/telecom side. Linemen have reported being told to pull power cable out of conduit and replace it with a fiber cable and code it to the energy side not the Island Network side of the company.
All these broadband / telecom infrastructure costs add to the capital expense and yearly operating and maintenance expenses placed on or power grid that require increased energy bill costs to our members. As far as I can tell the broadband / telecom customers of OPALCO are not having to pay for their building or use of this “backbone” network.
This is how Jay can state he will receive fiber broadband for $60 per month. You who will not be able to afford it will be helping cover the costs of providing him with that improved broadband through your high energy billings. That is cross-subsidization.
Washington State outlaws the provisioning of internet to end users by a PUD.
https://www.atg.wa.gov/ago-opinions/authority-public-utility-districts-and-rural-port-districts-provide-telecommunications
SHORT ANSWER (from the Attorney General)
A PUD or rural port district may not sell or lease excess capacity to end users under any circumstances. RCW 54.16.330(1) and 53.08.370(1) each contain a rule of construction that precludes interpreting those statutes to allow sales or leasing of telecommunications facilities or services to end users. No other statute provides authority for a PUD or rural port district to sell or lease telecommunications facilities or services to end users. Because PUDs and rural port districts lack the authority to sell or lease telecommunications facilities or services to end users, and the legislature has not distinguished governmental agencies, the Interlocal Cooperation Act does not authorize a public utility district or port district to sell or lease telecommunications facilities or services to another public agency as an end user.
Do Public Utility Department (PUD) laws apply to Opalco? The difference between a PUD and a Coop is that a PUD is owned by everyone in an area whether they get service or not while a Coop is owned by those that receive service. Does this distinction excempt Opalco from the law that prohibits public utilities from providing broadband service to the end user?
https://en.wikipedia.org/wiki/Utility_cooperative
In Washington State
Gray – Your main focus seems to be to discredit the leadership of OPALCO regardless of the topic. We can parry from topic to topic but ultimately that is a waste of member resources: you don’t trust OPALCO and nothing we do or say will change that. To briefly correct some misperceptions in your latest comment for the 91% of our members who do trust us:
• OPALCO does maintain capital reserves to handle emergency repairs. The upcoming cable replacements are not emergencies – we are planning for them through our normal construction work planning process, four years at a time.
• Go to https://www.opalco.com/wp-content/uploads/2015/01/2015-Budget-Report.pdf and see the chart called Contribution to Revenue Increase that is part of our 2015 Budget Report to get clear on what is driving our rate increases through 2019.
One thing we can all thank Gray Cope for (along with a small fistful of fellow outliers) is the unprecedented number of documents now available online at http://www.opalco.com. In our peer group of 900 rural electric cooperatives, no other utility has gone as far as we have to make sure that proof of the transparency with which we always operate – and have operated since 1937 – is now available through layers and layers of documents online. The new online Document Library comes at considerable cost and staff time.
We have heard from the OPALCO Spokesperson that the OPALCO members only elect the BOD and they (the BOD) make all of the decisions for us. It seems that there are virtually no limitations on the decisions that the OPALCO BOD can (and will) make. As I indicated earlier this approach seems to be the direct opposite of:
“OPALCO is organized and aligned with the Seven Cooperative Principles (as per the OPALCO website) wherein it states.
” Democratic Member Control—Cooperatives are democratic organizations controlled by their members, who actively participate in setting policies and making decisions.”
Those of us who are complaining about the BOD venturing off into expensive and risky business areas and significantly ramping up the fixed and kwh consumption rates are basically being told that we do not understand and that the OPALCO management and BOD are doing the right things.
There is a simple solution here that is fair and creates real decision making authority for the members. The members should act to amend the OPALCO Bylaws to limit the current virtually unrestricted authority of the BOD. An amendment to the Bylaws can be initiated by as few as 50 members and ultimately would be put to a vote of the entire membership at an AGM. Such a Bylaw amendment would require affirmative votes by a majority of the members should the BOD recommend any of the following actions.
•Consumption rate ($/kwh) increases that are in excess of 4% over the previous year’s rate.
•Facility charge increases that exceed 4% of the previous year’s rate.
•Entry into any new business or altering the business model (i.e. from wholesale broadband to retail)
•Acquisition by OPALCO of any business entity be it by purchase or merger
If the BOD believes that OPALCO should undertake any of the above identified actions then they can explain it to the membership at the time. If their plan and course of action is well thought out and generally supported I am sure the members would applaud their recommendation and approve them. Whichever way it goes, the members have spoken!
In this way, the management and BOD continue to guide the COOP but the members retain the right to decide major issues such as substantial rate increases and moving into new areas of business.
That would fit the COOP concept of “Democratic Member Control” much better than the current situation.
Suzanne,
If you want to keep trying to make this personal about me and claim I have ill intentions behind my actions or I don’t know what I’m talking about, okay. That is your right, but it also reflects on our board and management that they are paying you to take that approach.
I’ve stated here, elsewhere, and directly to our board of directors and management that I am grateful for their service to our co-op. I am grateful for the information they have management release. Something I asked for a long time. I respect them and am not trying to discredit them. I believe they are not fulfilling their fiduciary responsibility in fully informing us of the risks of the broadband retail business expansion.
I am bringing to light what they are doing and how it is being done. How is it possible for our energy members to get a balanced perspective on the broadband expansion to our business if everything coming from OPALCO about it is rainbows and unicorns and trying to sell us a product?
There apparently are no risks the board feels are worthy of notifying us about.
This was the case in the original broadband study summary that stated the risks and financial risk management would be explained in the summary and weren’t. I believe the business plan and go to market document released last October has similar blind spots.
I believe most of our members are intelligent enough to take in the information I am providing and see I am not against broadband, not against OPALCO doing wholesale broadband as they originally planned if the co-op is not allowing our wireless and fiber backbone network to be used free of charge and it doesn’t inequitably burden those who can’t afford or do not want the OPALCO retail broadband product. I am also open to the idea of our co-op doing retail, but I don’t see that the board has explained why it is better than the wholesale approach.
The table you referenced does not show us what is included in those percentages with regard to broadband.
In a healthy cooperative there is a place for the open sharing of different views and information both among our member-owners and our board members.
Hi Sandy,
Our cooperative is a private business owned by our members. It does not qualify as a PUD nor should it be subjected to oversight by the WUTC.
Don, Regarding your last question, I think Suzanne said it well in her previous comment:
“The way democratic control works in our cooperative is that we, the members, elect our Board of Directors and they make policy. A membership vote is not required and very few decisions outside of board elections and bylaw amendments have been put to a vote of the membership throughout our 77 years. We, the members, can also participate in policy discussion by following issues published in board materials and attending board meetings. That said, the board is very interested in what our membership wants and needs and commits resources and staff time to get member input regularly. The 2014 member satisfaction survey provided key feedback and support for the decisions made this year. This culture of listening will continue with regular surveys and other tools to collect member input. I recognize how much information we are all exposed to – it’s hard to keep up. The best way to stay apprised of what’s going on at OPALCO is to sign up for our email newsletter – and you can do so online at opalco.com.”
The Board is the elected representative of the membership and therefore is empowered to make decisions and be accountable to the membership. That’s my view.
We saw this principal in action during the OPALCO board election last year, where some of the candidates ran on the platform of stopping OPALCO from making fiber internet available to its members. Those candidates all lost. Members voted.
For those of you who appreciate the benefits of broadband, but are uncomfortable with OPALCO taking the lead, please take a look at
https://www.theguardian.com/world/2014/aug/30/chattanooga-gig-high-speed-internet-tech-boom
and many similar articles. Apart from Kansas City (due to an experimental investment by Google) and a small number of other cases like Chatanooga that have overcome furious opposition from cable/telecom companies to install public sector broadband, the US is an internet desert compared to the rest of the developed world. If you add functional broadband to the amenities intrinsically present in the San Juans (perhaps beginning with proximity to Seattle), the potential for substantial boost to our local economy seems more than plausible. I’d bet on it. I don’t diss the construction of second homes and service of vacation rentals, but I hope that’s not all there is in our local economic future.
William,
I’m not sure what your point is referencing Chattanooga broadband. Should we be doing a public municipal utility . approach or is there some relevance to our situation compared to a city of 173,000+ people and an $111 million grant from the Department of Energy? Or is there something to be learned from spending $550 million of taxpayers and ratepayers money / capital to build their network. Or should we learn from their example of how their share of the broadband market is a small percentage of Chattanooga’s 173,000 residents?
I believe there is a place for municipal broadband, but every case is driven by different factors that are complex. Chattanooga had a publicly owned utility and the citizens decided to saddle themselves with the costs. In our case it is a board of 7 of our energy member-owners driven by lots of special interests from high tech workers to political candidates to realtors. None of which have looked at the financial risks or details. I’ve seen them come to our board meetings and other than making their pleas to have the board solve the “problem” I haven’t seen one of them who isn’t on the co-op payroll stay an entire board meeting or demonstrate they understand the financial repercussions.
One of the problems raising claimed success stories is separating the broadband entity generated hype from reality. Something our co-op is challenged with. For example here is another perspective than the one you linked to: https://www.washingtontimes.com/news/2014/sep/25/golden-hammer-chattanooga-chokes-too-much-fiber/?page=all
Notable quotes are as follows:
“Federal taxpayers are on the hook for the $112 million stimulus grant, plus an estimated $46 million in interest. EPB’s electric customers are footing the bill for more than $390 million in bond payments to help cover construction costs related to the fiber network. ”
“Promises that the lightning-fast Internet service would generate economic development and create jobs in the southeast Tennessee city have never materialized. The service has also failed to meet projected subscriber goals.”
“Actual customer numbers this year have fluctuated between 58,000 and 64,000, well short of the initial projections.” [over $1/2 billion spent to service up to 64,000 customers!]
There is no evidence of analytical process or information from our board showing that doing risky retail broadband is better than the wholesale approach they abandoned twice with little earnest effort into making it happen. There is no information from our board that demonstrates the risk to our cooperative or that they even have a financial risk management plan for the broadband-telecom business other than reaching deeper into our energy members’ pockets if things don’t go as well as they hope.
We need a board of directors who care more about our financially struggling members-owners. High fixed monthly charges are great for a board and management loading debt an hugely increased operating costs on our company, but is horrible in terms of encouraging folks to make sense out of energy efficiency choices or making alternative energy (solar & wind) investments. It damages the economic incentives and the debt load makes future investments we could one day make in our own energy production very limited and more costly.
Burdening our co-op members with an extra $8 to $10+ million per year in their energy bills puts an unfair burden on the 30% to 40% of our owners who are financially struggling and those high fixed monthly charges inequitably saddles them with a disproportionate share of the operating costs to run a broadband-telecom bloated infrastructure.
These people are a significant part of our county and cooperative and equal member-owners. OPALCO’s board of directors needs to care more about all of its owners!