Friday, November 17, 2006

GVEA and the G&T

Well, Hans and I went to the Fairbanks-area public meeting on the generation and transmission cooperative proposal that GVEA's staff put on at the Noel Wien library on Wednesday night, and man, I was not impressed. I'd been feeling a little more kindly disposed toward the whole idea after talking a bit with Tom Irwin on the phone, but still rather uneasy as a whole, as expressed in my most recent editorial. But after the presentation? Hoo-boy!

There were around 50 people at the event, and the GVEA staff started things off with a cutesy, condescending little infomercial about GVEA. It was terrible, and not all that informative. And it looked like it cost them a lot of money, too. Set my teeth on edge. Hans couldn't stand it. He got up and left about halfway through it, snorting to himself after he got into the hallway, "Do they think I'm twelve years old?" and startling one of the GVEA staff (probably Corinne Bradish, by his description). Hans and I weren't the only ones gritting our teeth through the stupid thing, though: there were plenty of compressed lips in that audience.

So with that ill-advised beginning, they went on to the presentation. It was fairly informative, but all very positive and cheery about the idea, with no discussion of the possible cons of handing off 60% of GVEA's assets. It was also a bit confusing, as they seemed to describe things slightly differently depending on what their apparent desired effect was on the audience. Sometimes they'd make it sound like the G&T was an independent entity, and other times that it would be under the complete control of the GVEA board and by extension the membership. I found out later that one of the graphs they showed us, depicting the amount of fiscal backup required for a G&T versus a utility like GVEA, was deceptive. It showed that a G&T would only need a 1:1.1 ratio and GVEA needs a 1:1.75 ratio (i.e., $100 margin available per $1000 of loan versus $750 available per $1000). But in fact, they were showing the minimum for the G&T and the desired max for GVEA--the minimum is $250, not $750. Evidently GVEA hasn't been able to achieve the $750 margin. So our supposed savings of $30 million is not so large after all. I don't quite understand the margin thing fully, but this was explained to me later by somebody in a position to know.

Still, the presentation overall, despite the twisting of the financial facts above, was pretty clear. Our protections and guarantees boil down to two contracts that would be made between the G&T and GVEA: a management contract and a power & sales agreement. And those would be worked out by staff and approved by the two boards. They aren't being presented to the membership, and wouldn't be.

It was during the lengthy period of questions and answers after the presentation that some of the more interesting and infuriating things came out. With the very first person to ask a question, Susan Johnson (author of one of McRoy & Blackburn's books, Alaskans Die Young, by the way), the staff blew it. She asked one straightforward question, and one rather rhetorical, sarcastic question: If the banks are the ones determining all the ins and outs of the G&T (apparently it's all their regulations & requirements that are the reason for this whole thing in the first place), why not let the banks run GVEA? I thought it was a pretty funny (and somewhat snide) comment, but the staff took it seriously. They answered her as though she didn't understand that banks aren't electric utilities. I was appalled.

Alex Koponen, who is a lawyer, asked why the one board member who'd voted against the proposal had voted that way. "What were his reasons?" he wanted to know. Tom Irwin hemmed and hawed a bit, and then said he didn't think it was his place to answer that question, and so handed it off to the chair of the board, who went on about how the board had considered all sorts of options and this and that but they ended up deciding on this proposal in the end and... But he never answered the question.

I got pissed. So I marched up there right away and turned toward Tom DeLong, who was the board member who'd voted against the bylaws, and asked him point blank what his reasons were for voting against them. He'd not told me before, and I wanted to know. I was glad Alex had asked about this, because I had the same question, and then when they tried to waffle out of it (not even asking Tom to explain or acknowledging what the differences were), I was outraged. It was an obvious and not very clever bit of attempting to avoid telling us what was going on. Perhaps they thought they were protecting DeLong, but given that he'd been yelled at by the rest of the board for voting this way, I suspect not.

So anyway, DeLong comes up to the mike and proceeds to tell us his reasons, which were: that GVEA seemed to be working fine before this for a good 60 years, and so why make such a profound structural change? And he didn't think that the bylaws gave the members enough control. There was another reason, which I wrote down in my notes, but I can't remember at the moment. I think he also doesn't believe the bylaws are well written.

The evening continued along this way until the building closed. Many people wanted to know what the rush was, and where the comparison between pros and cons was, and exactly how or if the G&T would be answerable to the GVEA board and members. I was dissapointed in Mr. Irwin, who made a couple of appeals to the emotions, bringing up the example of members down on their luck who couldn't pay their bills. He was making the point that the essential effort was to reduce rates, but it seems to me that one can help those in trouble without diminishing the cooperative's control over its own assets.

The other thing that the staff kept saying that bothered me was that voting on this proposal was a matter of whether we trusted the GVEA board. That puts it into the realm of the personal, not the logical. Boards change. Trust is all well and good, but that's a matter of personalities, not the structure of an organization. The G&T board could be made up by as much as 60% of people who are non-GVEA or electric cooperative members--they wouldn't have to be from Alaska, even. They could be "any person" that the G&T board approves. This might be good for getting expertise, but it isn't good for people who feel they have a personal, not just fiduciary, responsibility to GVEA members.

And the current GVEA board seems to have been doing a lot of rubber stamping of things the staff presents. If staff is doing its job right, that's fine, but the board is there to make SURE it's done right. And in this case, I don't think that the board has done a good job. Perhaps the question is whether we trust the staff? From Gary Newman's descriptions, the board seems to go into executive session a lot, which also doesn't seem to me to be all that healthy for GVEA.

One other thing the staff kept saying was that there had been 12 presentations. I'm betting they weren't advertised or open to the full public, maybe only to specific groups (big power users? banking or business types?)--Tom DeLong said he hadn't heard about any more than the three I'd heard about, that were listed on the card that came in the mail.

The presentation and questions are supposed to be posted on the GVEA website. But after this meeting, I am firmly convinced that GVEA members should vote no. It might possibly be worth revisiting sometime down the line, but not in this form, and not now.


Anonymous said...

So, is Tom Irwin going to handle Palin's transition from Fairbanks or will he move to Juneau or Anchorage to take up his new duties. I take it his career at GVEA is over.

Maybe he can put some competence into the new administration. A grateful Alaska will thank him.

Thanks much.

Harry Lynn Beck, P.E.

Deirdre Helfferich said...

I hope so. As I say above, I'm disappointed in Irwin's performance on the G&T issue. He doesn't seem to me to be the example of probity that I thought he was.