The March 2011 Edition of Watts & Volts

I received the latest Watts & Volts this weekend. This one is billed as the "Annual Report" but does not begin to rise to that level. A few observations are in order.

IREA FACES CHALLENGES in 2011
Please do not boast about record-setting margins. An electrical Coop is a non-profit monopoly, organized to operate "at cost". Margins represent the amount charged to member/owners in excess of the Coop's costs. Unlike for-profit organizations record margins do not indicate good management, they indicate poor management. Those "record-setting" margins are nothing more than a tax on member/owners. A tax imposed at management discretion, without the approval of the Coop member/owners.

LEADERSHIP CHANGE
The organizational chart of the IREA includes two assistant general managers, one in charge of operations and one in charge of finance. Both of these gentlemen enjoy six figure incomes and manage the "real" Co-op business of buying and delivering electricity to our homes. We have been paying our soon-to-retire general manager half a million dollars a year to spend much of his time tilting at political windmills. His retirement will not create any leadership challenges for the core mission of the Co-op. The only question is who will become the new Chief Lobbyist.

BUSINESS SYSTEMS IMPLEMENTATION
What is the cost and expected ROI of this new business information system? Since implementation of major software changes like this are notoriously over budget and late, will you keep us updated on both the progress and any cost overruns?

LEGISLATION AND REGULATION
The IREA has put us on notice that they plan to continue spending member/owner funds on state and national political issues. However, please leave this to the state and national electrical coop associations. That is their role. Please do not waste our money by hiring a new half million dollar GM to play the role of Chief Lobbyist.

FINANCIAL STATEMENT
If this were a for-profit organization, you would be run out of town on a rail for the appalling lack of information provided in this statement. You have taxed the member/owners $30,437,323 and refunded $8-million, retaining $22,437,323 for "working capital" to be added to the capital credit account. If there is one sacred trust that management owes the member/owners of the Co-op, it is a complete accounting of the member/owner capital account. As of the end of 2008 [per your public filings with the IRS] this account was in excess of $140-million dollars. These funds represent a tax-free loan to the Co-op and on average amount to more than $1,000 per member. These amounts keep increasing as you continue to take more in "margins" than you give back in "rebates".

Members deserve and if necessary will demand a full and detailed accounting of their capital account money. It is their money, they hold the only legal claim to every penny. As a start, what is the total amount of the account? How much of that is orphaned because you have no record of members who have left the service area? How much is allocated to "working capital" and how do you justify that sum? How much is invested and in what instruments? How much is allocated to other uses and under what justification? How are rebates determined? Why not $16-million or $24-million as a number for the 2011 rebate? Why not the entire margin? Given the size of the Capital Account, why not rebates in excess of the margin?

CONSUMER INFORMATION
Please do NOT call us consumers, we are the member/owners of the Co-op. You work for us.

RATES
As we began the 2010 calendar year six other much smaller Colorado co-ops charged rates that were lower than the IREA. The one other co-op that invested in Comache 3 started the year with rates that were 12% lower than the IREA. Given our overwhelming size advantage and resources, we expect our Co-op to always have the lowest rates and not merely be "among the lowest."

OUTAGE RATE
Give us some context here. What is the source of the "industry standard" 5 hours per customer? Is it a national average of all utilities, including public and municipal utilities? Do you count hours lost due to our wholesale energy suppliers? What I would like to see is a comparison with all other Colorado co-ops and given it's size would expect the IREA to set the standard for reliability.

SYSTEM IMPROVEMENTS
This would have been good place to fully disclose the details of the Dozier/IREA land deal for the new sub-station in Park County.

JIM ANEST APPOINTED TO IREA BOARD OF DIRECTORS
I'm sure the by-laws have been modified to allow this, but a few closed door meetings and you appoint a new director to the board and change district boundaries? Electrical co-ops were originally set up to be democratic. Doesn't this move effectively disenfranchise all of the Co-op members living in Parker.