WEMC Board Member supports forensic audit

Yesterday following the Washington EMC (WEMC) monthly board meeting my district rep, Billy Helton, was nice enough to spend a good bit of time talking with me despite his need to return to work. Billy has been on the board since October 2010, and he worked hard to defeat an incumbent who had been there for decades. He will readily say that he is still learning, as I am too.

Billy is very concerned about the money that has been spent on Plant Washington by WEMC, which totals about $1M. Understandably, he wants to make the most of the money spent, and worries that abandoning the project will result in wasted money.

A worthless permit

One option he raised is getting the permit and selling it. That permit won't be worth the additional money required to get it, if it can be had at all. LS Energy cancelled a coal plant in Southwest Georgia just last month in part because there is a surplus of power and the cost of construction and emission controls would not be profitable.Power suppliers across Georgia, and the Southeast, already have surplus that they can't sell with consumers reducing use now. And as Cobb EMC demonstrated with their RFP in December, there are ample options among supplier offerings. Trying to sell a coal permit in Georgia now would be about as easy as selling bottled water to a drowning man. 

And the attorney fees

And the cost to get the permit? Those of us who have sat on the hard benches in the Administrative Courtroom in Atlanta will contest, P4G has a deep bench of expensive lawyers from King and Spalding when they are in court. The cost? Based on going rates for "Big Name" firms, we conservatively and confidently estimate that each lawyer is billing AT LEAST $500 PER HOUR to sit in the room. They haven't had fewer than three attorneys there when I have attended. That doesn't include the billable hours prepping for court and other P4G work. I could do a lot of good work with $15K per hour. And like the P4G attorneys, I would be willing to put in a lot of billable hours.  

And the cost per EMC member

With Cobb EMC no longer propping up Plant Washington, the math looks like this (and note to Dapper Dean: if P4G can announce a $2.1B coal plant without a pro forma estimate, plant opponents can use real numbers like customer base, and do our own math. And please don't use that "naive or just intellectually dishonest" stuff on us. We are neither and the truth validates our points). When Plant Washington was announced four years ago, the customer base among the nine participating EMCs was 741,000. Fast forward to this week, and the customer base for Plant Washington with the four remaining co-ops has been reduced by 77 percent to 167,000 customer meters.             

The math looks like this: Washington EMC has spent $1M of owner dollars on Plant Washington. That equates to $67 per customer so far. With just four remaining co-ops participating in a $2.1M project, the cost per member skyrockets to $12,575 PER MEMBER. I don't know about other folks, but I don't think I can squeeze that kind of money out of my household budget to support Plant Washington. Suddenly the assurances of affordable power don't hold water.   

We can put an end to the madness 

WEMC owner members need to contact their board rep and tell them that it is in the best interests of the co-op to stop now. Let's give them some encouragement to change course for the better. 

Helton: I support a forensic audit

While I may be the one shouting the loudest and the most often, I am not the only one speaking up, or talking with friends and family about the sad state of governance and transparency with the co-op. Billy appreciates the  lack of confidence that many members have in how things have been handled.

With that in mind, he agreed that a forensic audit could be a helpful way to provide information to the owner members and also serve as a way to begin to repair the broken relationship. I added that there should be a committee, with members making up the majority of the group, selected to handle the selection of a firm to conduct the audit, and then report back to the Board and members when it is completed. He agrees there too.

This could be a huge step forward for our co-op. The members want to have confidence in the decisions that are made. Those decisions impact each and every one of us where we work and live every day.

WEMC owner members need to tell the Board that instead of being disappointed if they leave Power4Georgians and Dapper Dean's water sucking, money burning, toxin spewing dirty old coal plant, we will congratulate them for recognizing that a lot has changed and been revealed in four years. We need to do that now.

And while we're at it, let's all thank Billy for wanting to make our co-op the best possible by restoring some confidence in fiscal operations and decisions.  

Not a WEMC member? You can help too.

If you aren't a WEMC member, contact them anyway. The changes at Cobb EMC and other co-ops  were augmented by members who asked for help across the state. We all need clean air and water and affordable power, and operating in a silo doesn't make sense.     

WEMC Board and Senior Staff

Mike McDonald, District 1.....706–465–9414
Jeff Larksen, District 2...........706–444–7556
Joe Taylor, District 3..............478–452–7817
Bill Helton, District 4..............478-348-3078
Mildred Jackson, District 5.....478–552–9438
Chair Mike McCoy, District 6..478–552–0895
Ken Vickers, District 7............478–864–2459
Washington EMC office.........478.552.2577

Email:

Frank Askew, CEO f.askew@washingtonemc.com

Chair Mike McCoy, mmccoy@washemc.net

Wendy Sellers, CFO w.sellers@washingtonemc.com

    

There would have been more, but I ran out.

The Friday Photo

A weekly photo inspired by spontaneity, art, and community.

Work was interrupted for a short celebration this week
Dapper Dean's coal plant lost its sugar daddy on Tuesday
This week's work has been powered by passion    

Is Washington EMC "winging it" on Plant Washington finances?

My electric co-op requires that owner members fill out a form to ask permission to attend part of the Washington EMC's (WEMC) monthly board meeting. Yes, owner members must fill out a form, have it reviewed, and be approved to attend the board meeting for the co-op we own. We are allowed in just long enough to raise whatever concerns we have specified in our request, and absolutely nothing more than that. Earlier today fellow co-op owners Larry Warthen  and Lyle Lansdell joined me and Mark Hackett, a Cobb EMC member and electric energy expert, for a presentation on pro forma estimates and how that pertains to Plant Washington (because we learned two weeks ago today that there never has been a pro forma estimate for the $2.1B Plant Washington.

Hackett did a good job of explaining in layman's terms what a pro forma estimate is, why it is important, and how it can be used for making good decisions. His Power Point not only explains why a pro forma estimate is critical for a project as large and expensive as Plant Washington, but he also included charts which demonstrate that there is, and will be, sufficient power available for my EMC without this plant.

Following the presentation only one board member, Billy Helton (who happens to be my district rep) asked a question about power generation and supply which showed he was really thinking through the information that was presented. When CEO Frank Askew asked if any of us had a question, I asked how much the co-op has budgeted for 2012 expenses for this $2.1+B project which has no pro forma estimate and just lost the funding from the largest co-op in the project. It seemed germane to the the discussion.

Askew said that my question wasn't specific to the form I had filled out 10 days ago. Since we were talking about budgeting and decisions relying on owner member dollars, I thought it was appropriate. Call me crazy. The money comes from the members so I feel like I have a vested interest in what they decide.

As the board left the building I approached Mike McCoy, the Chair. He said that WEMC doesn't even have a P4G budget for 2012 and in fact the four remaining co-ops will meet soon to discuss that. It made my head swim. We are almost one month into the year on a project which even by conservative figures is well over the announced $2.1B dollars to build, and still lacks a pro forma estimate.

Since the money decisions seem to be made by moving some numbers around on the back of an envelope, maybe they ought to consider this: when Plant Washington was announced four years ago, the customer base among the nine Power4Georgians co-op participants was 741,000. Four years later, with just four co-ops clinging to this project, the customer base is 167,000. That's a reduction of 77 percent in customer load. In a state where there is a surplus of readily available and affordable power.  

Hmmm. They have spent $1M of our money, have no budget for 2012, and the largest co-op just took their marbles and left based on the fact that Plant Washington isn't a sound financial project to continue pursuing.

So, although I am repeating a question that has been asked often in the last four years, "What does the WEMC Board and senior staff know about new coal plants that companies abandoning coal don't know?" Owner members deserve an answer. Now.

Cobb EMC just left Plant Washington at the alter

The Cobb EMC Board of Directors voted to call off the wedding with Plant Washington Tuesday after a  four year engagement which involved a swollen budget, court actions, 35 indictments, and in the end, a realization that this marriage was a bad idea from the beginning.

Cobb EMC owner members have demonstrated that it is possible to regain control of a co-op, and Tuesday's decision in favor of better fiscal action reflects that. Washington EMC members are urged to call their board member and the office on Wednesday and tell them, "NOT ANOTHER DOLLAR ON PLANT WASHINGTON! GET OUT NOW!"

The timing is uncanny. Last week I filled out the "permission form" so I can attend the board meeting of the co-op where I am an owner. That's kind of like asking your first grader if you can see the report card because you are the parent. I asked to attend (the board doesn't believe in members attending the regular meetings and participating in the co-op we own) the meeting by filling out a form and explaining exactly why I wanted to be there.

Fortunately the CEO and Board agreed I could be there, along with two other co-op members and an energy expert, who happens to be a Cobb EMC member. Tomorrow Mark Hackett, who is one of the nicest people anyone could ever wish to meet, will share information about pro forma cost and revenue estimates on projects like a coal plant.

That's especially handy because a V-P at Cobb EMC told the Marietta Daily Journal less than two weeks ago that there is no pro forma estimate for Plant Washington. Should the WEMC Board have any lingering doubts about the financial soundness of Plant Washington, or their legal obligation to carry out their fiduciary responsibilities on the members' behalf, if they listen with open minds and hearts they will see that there is no future in Dean Alford's no-bid Plant Washington.

So, to all the people who have spoken out against Plant Washington, and taken great risks in doing that, your bravery and moral fiber have helped bring us where we are today. For those who know this project is wrong for our community but haven't spoken out yet, there is a huge and important opportunity for you today.

Call the Washington EMC office at 478.552.2577 and tell them to VOTE TO QUIT PLANT WASHINGTON on Thursday, January 26. This plant will impact all citizens in the area and it is absolutely appropriate for anyone to call. If you are an EMC member call your Board Representative too and speak up.

There have never been any good reasons for Plant Washington to be pursued. There are no good reasons for Washington EMC and the citizens of Washington to worry about another dime being spent on it. STOP PLANT WASHINGTON NOW. SPEAK UP. DO WHAT IS RIGHT. This is the time. Don't worry about what you could have done or wish you had done. Do it now. Today.

Mike McDonald, District 1.......706–465–9414
Jeff Larksen, District 2...........706–444–7556
Joe Taylor, District 3..............478–452–7817
Bill Helton, District 4..............478-348-3078
Mildred Jackson, District 5.....478–552–9438
Chair Mike McCoy, District 6..478–552–0895
Ken Vickers, District 7............478–864–2459Washington EMC office.........478.552.2577                    

Co-op members expect more than a pat on the head

Washington EMC co-op members may have been pleasantly surprised when they found dividend checks in the mail this week. The checks come two weeks before Christmas, and while it isn't a large check (just under $35.00) I am glad to have the extra cash before the holidays.

But the check didn't make me feel all warm and fuzzy, despite its unexpected arrival in the mailbox. It kind of feels icky, like the Board knows the members are really unhappy, and we aren't going to tolerate the way things have been done in the past. Did they send us a dividend just before Christmas to take the edge off member unhappiness with the Board's interaction with members? Is the check a pat on the head like the Grinch gave Cindy Lou Who when he gave her a glass of water and sent her back to bed so he could continue to steal every bit of Christmas from her house?

Just simple coincidence to arrive 12 days before Santa gets here? How would we know? Board meeting minutes and financials aren't readily available to the members, so we don't know if the Board felt the hot breath of the members on their necks and decided to distract us with a little money just before Christmas.

The members are not easily fooled or placated. Our eyes are wide open.We turned a corner at the October Member Meeting and the Board knows it too. WEMC leaders can embrace better governance now and lead the way among EMCs in Georgia, or they can dig in their heels and hide behind a closed door. The choice is theirs. And Santa is watching to see who is being good.

Longleaf fight brought tears to my eyes this morning

The longest active fight to stop a proposed coal plant came to a close today with a huge victory for the health of Georgia's citizens and our fragile natural resources. As soon as I realized what the call was about (we had no idea why we were asked to participate) my eyes welled with tears. Stopping this 1200MW proposed coal plant is a HUGE VICTORY for grassroots organizers across the country.

Bobby and Jane McClendon have taken lots of grief from their neighbors in Early County while opposing Longleaf, but they remained steadfast in their determination to stop a coal plant that would ruin the air they breathe, the water they drink, the fish swimming nearby, and the health of their friends and family (now and future generations). With the help of Colleen Kiernan at the Sierra Club, Erin Glynn with the Beyond Coal Campaign, Justine Thompson at GreenLaw, and a very long list of other organizations, individual citizens, attorneys, experts, and funders (remember, no one on the coal plant opposition side of the equation is billing $750+ per hour for legal work to stop these nightmare plants, philanthropic groups play a vital role in this work).

What does this mean for Plant Washington? It should serve as notice to the leaders of P4G, my local EMC Board, co-op members, AND the citizens who are fighting Plant Washington that in fact coal can be stopped in Georgia, despite the high priced lawyers and experts, and millions of shareholder dollars that are sunk into a project like this.

In one day's work this summer individuals shut down the phone system at LS Energy, the developer of Longleaf, with calls opposing the plant. That day was one of many spent during the past 11 years developing opposition to this pollution spewing plant. The grit and determination, skilled work and strategy, and long hours (and funding) have resulted in a victory that serves as a model for work against Plant Washington. I hope it is the last proposed coal plant that must be defeated in our country.

That sounds ambitious, but with Georgia being one of the few states still issuing new coal plant permits (never mind that our rivers are already full of mercury, we don't have enough water to power new plants, our air quality is declining, and the health of our state's citizens is impacted negatively in both the long term and short term pictures), we still have work to do.

With the news today about  Longleaf, I've rolled my sleeves up a little more. If you want to make a difference right now in the work that I am doing via FACE, please consider joining or making a contribution here. I love a good fight, and I am in this one to win.

New Leadership Signals Trouble Ahead for Plant Washington

My friends at SACE have summed up the release of the air permit for Plant Washington and the new direction expected to be chosen by newly elected Cobb EMC directors. Read their blog here.

Driving Co-op Reform

This morning's scan of the news included three articles on Cobb EMC. I couldn't have started the day any better.

The Cherokee Tribune reported that the current Chair, Larry Chadwick (serving since 1982) and the Vice-Chair, Sarah Brown (elected in 1979) will not pursue re-election. The Atlanta Journal Constitution includes an article on the "New Day" at Cobb EMC, which will include open board meetings, quarterly reports, a member advisory committee, a new logo, and bills for service coming from the co-op, not the beleaguered for-profit Cobb Energy. The Marietta Daily Journal, which has faithfully stayed on top of this complex and long lived issue, included the recent release of Chip Nelson's salary as the new EMC CEO.

I had no idea that today would be the first time I could tell fellow Washington EMC co-op members that if Cobb can begin to operate in a transparent manner that better serves the members, surely we can do the same here.

A lot of ground work has been laid for the Annual Meeting this Saturday. Some people are coming because of the opposition to the Board Chair, who has been on the board for 37 years. Others are coming with questions that deserve answers. Some are coming for both. Maybe the bonus will be that members who come because of the door prizes stay for the question and answer session with the Board, and see there are other benefits to membership besides a chance at a nice door prize.        

    

Simple Math

Some people where I live wonder why the "doings" at Cobb EMC are so important to my fellow Washington EMC co-op members and Washington County tax payers. Cobb EMC is the lead partner in a group of EMCs who want to build a coal fired power plant about 8 miles from my house and 8 miles west of my family's timber farm.

Some of the Cobb co-op members have reviewed a just released audit which reveals stunning losses to the co-op. The Cobb EMC Owner's Association (CEOA) site includes the following on the costs of delays in liquidating Allied Utility Network and Allied Energy Services, the company which received a no-bid contract to build Plant Washington in my front yard. The CEO site includes this:

UPDATE: According to the 2011 Audit Report, Allied Utility Network ceased operations in October of last year and was dissolved – apparently with no disposition of assets. The company had never been profitable. Its only earnings had come from services provided within Cobb Energy or its affiliates. From 2002 to 2008, it had earned $20.8 million with operating expenses of $26.5 million. Cobb EMC, of course, subsidized the loss through service fees and other charges billed by Cobb Energy.The report also states that Alford’s Allied Energy Services was sold just one month ago on August 9th, for the whopping sum of $128,256. Quite a bargain for the company selected by Power4Georgians to develop two multi-billion-dollar coal plants. Perhaps that’s because it, like Allied Utility Network, had never been profitable — at least not for Cobb Energy. From its creation in 2004 through the end of 2007, it had spent $5 million to bring in revenues totaling only $704,000 — a loss of $4.3 million.Finally, we are able to see from the report that Rayder’s and the Board’s foot-dragging was costly, because subsidiaries held in the liquidating trust appear to have continued to operate at a loss, cancelling out all the gains from disposition of their assets and costing the co-op an additional three quarters of a million dollars:

2008-09 Report: Net loss of $662,367
2009-10 Report: Net gain of $1,964,044
2010-11 Report: Net loss of $2,061,824
Total: Net loss of $760,147

That's a lot of member dollars for the Board to lose while receiving thousands each year in compensation.
When Dwight Brown announced the creation of Cobb Energy in 1997,  the Atlanta Journal Constitution reported that Brown promised members, “We will not allow Cobb EMC to subsidize this new company,” he said. "We make this pledge that Cobb Electric Membership Corporation will not subsidize this other company, and this other company is created to work for you and to work for Cobb Electric Membership Corporation.”

That promise never held water. The AJC reported that the Cobb EMC Board also loaned Brown $3M, and then forgave the loan. Brown used that money to purchase shares of Cobb Energy (Brown and his wife received close to $2M in six years time until the agreement was legally shut down). Since Cobb Energy was announced, the non-profit co-op's expenses have soared and member dollars have been funneled into subsidiaries which have lost millions. The co-op has also spent an estimated $10M+ in legal costs since Cobb Energy was created. And much of that involves legal fights against the very members they are supposed to serve.

Over 3.5 years ago my EMC got in bed with Cobb EMC (and seven other co-ops, four of whom got out of the bed over 2 years). But now we are beginning to know just how deep the problems at Cobb run. All this dirty laundry should raise some serious questions for me and my fellow co-op members about our business partners.

We may be a little rural community and we really do know where folks are going without using their blinker.  But that doesn't make us stupid. Understanding the management and financial problems surrounding Cobb EMC, their indicted former CEO, and their Board, doesn't require higher math skills, a degree in accounting, or an MBA. A little old fashioned country figurin' makes it pretty clear: we don't do business like Cobb EMC, and we would be better off to get out of that bed now.      

Cobb EMC Director's Retirement Benefits Can Total $211,200. Not Bad for a Volunteer Position.

For some unknown reason, after years of asking, the Cobb EMC has posted some of the financial information about Board of Director benefits. They receive:
$600 per board meeting
$500 for a committee meeting or a conference
$50.00 for a conference call
$211,200 in retirement benefits ($1,100 per month for a "volunteer" position) 
health benefits
life insurance

If the full Board meets once a month, it costs the co-op $6,000. At one meeting a month that is $72,000 just in costs to pay the Directors to "manage" the co-op. If 10 Directors receive the full amount of retirement benefits they cost the co-op, which is supposed to operate as a non-profit as a service to the members, $2,112,000. Yes, over $2M!

I am willing to go out on a limb and guess that because they were supposed to hire a new CEO to begin working  on March 1, 2011 (they didn't), and the CEO was re-indicted with four additional charges of witness intimidation for a grand total of 35 counts, that board met more than once in person each month. 

Maybe they meet when they prepare to appear in court as required by a judge (the newspapers said where they sat when they entered the courtroom last month looked planned). It adds up to a lot of money out of co-op members' pockets (and that doesn't even include the estimated $10M+ in legal fees that the co-op has spent in a protracted court battle with the members they are supposed to be serving).

Cobb EMC members stepped up to the plate years ago to re-gain control of their co-op. They have done it at considerable personal expense (good lawyers are important when you are fighting some of the most expensive lawyers in Georgia, like former Gov Roy Barnes and King and Spalding). They have also spent days, weeks, months researching to understand just how serious the problems plaguing their co-op are.

With today's revelations on how much is now known about benefits for the Board of Directors, it looks like more fuel has been added to the fire. Members are determined to wrestle the co-op back from the people who have gotten it mired in money losing projects for over 14 years. You can find out what they are doing by visiting Take Back Cobb and Cobb EMC Owner's Association. I wish them the very best of luck in continuing the work that is necessary to do this.