Angered by the lucrative and largely unknown perks, state regulators last month demanded rural electric cooperatives give them an accounting of pay, insurance and other benefits for board members and executives of the nonprofits.
And cooperatives have supplied that data to the Louisiana Public Service Commission. But most of the co-ops did so under a seal that keeps the information out of the public.
Angered at extravagant trips, insurance benefits, plus lucrative per diem pay for board members and executives, Louisiana’s utility regulators…
The PSC staff asked for copies of bylaws, three years of annual meeting notices, travel and expenses, information about the health insurance provided the part-time board members, and other data, PSC Secretary Brandon Frey said Wednesday. The particulars are gathered in six-inch thick binder being prepared for the commissioners to review later this week. But he can’t release information publicly without a court order because the co-ops delivered it under seal.
“That really makes me sick,” PSC Commissioner Foster Campbell, adding that the whole point was transparency because so few consumers or regulators know what is going on in the small and little-noticed cooperatives.
“I’ll address that,” Campbell said. “How come they don’t want to tell their members how much they pay their people? I don’t like the way that smells.”
Kyle Marionneaux, the Baton Rouge lawyer who is general counsel for the Louisiana Association of Electric Cooperatives, said submitting the information privately wasn’t meant to offend any of the five commissioners.
The co-ops were following standard procedures to protect information that competitors could use. “Generally speaking, any kind of financial information we provide, we typically provide it under seal,” Marionneaux said Monday.
Rural electric cooperatives were created more than 80 years ago to provide electricity in areas that were too sparsely populated to interest shareholder-owned utility companies. What traditional corporate utilities call customers, co-ops call members. Cooperatives are nonprofit and supposed to be owned by the members who buy the electricity.
Commissioners were startled to learn that board members at some of the dozen cooperatives that provide electricity to about 900,000 rural customers were taking lavish trips, receiving extravagant per diem, and an array of benefits, like health insurance, while paying their executives six-figure salaries that are 15 times the amounts earned by their members. They heard tales of board members make as much as $50,000 per year in per diem payments for attending meetings.
The matter came to the regulators’ attention when several of the cooperatives applied for rate increases and PSC staff noticed how much of the “operating margin” revenues were spent on perks.
Campbell is preparing a directive for the five PSC members to approve Friday that will start the clock on setting standards for not only how the rural co-ops operate, but for how the board members are elected. Friday's vote is but the first step of what will be a year-long, maybe more, process of drafting, vetting and approving specific regulations.
“We’re coming up with a whole package: term limits for board members, complete transparency on finances, a new way of electing them,” Campbell said, adding that membership to co-op boards is often a very closed affair with friends bringing on friends.
He also wants to cooperatives to stop buying insurance for board members and to set a per diem and mileage reimbursements in line with what state government pays public employees – including the commissioners. “We don’t need them flying all over country, to Las Vegas, for conferences and seminars,” Campbell said.
The five elected members are meeting Friday at Cypress Bend Resort on Toledo Bend Lake near Many.