Less than 24 hours after state regulators announced a sweeping investigation into the perks and benefits given board members of rural electric co-ops, one the organizations targeted stopped providing the part-time directors with insurance benefits.
The nine-member Claiborne Electric Cooperative board of directors voted unanimously Wednesday night to eliminate the practice of providing health insurance for board members.
The five elected members of the Louisiana Public Service Commission criticized the extravagant travel and generous reimbursements for attending meetings along with insurance benefits for the part-time directors who decide policy for the nonprofit cooperatives. The regulatory commission heard testimony that some board members make as much as $50,000 per year in per diem – payments for attending meetings. Most received an array of benefits that included health, vision and life insurance.
“The health insurance benefit has been in place for a long time, but it is not the reason we serve on this board,” Claiborne Electric Board President Hez Elkins said in a press release Thursday. The board vote was aimed at preventing anyone from “sowing division” into the cooperative, he said.
“We serve on the board because we know how important our co-op is, and we want to do everything we can to keep it strong and safe from anyone who would seek to harm it. So, we willingly give up that insurance.”
Claiborne Electric’s General Manager Mark Brown said electric cooperatives around the country commonly provide insurance for their directors. With the rising costs of healthcare, however, the Claiborne Electric board had been considering reducing or eliminating the benefit, he said.
“When the issue was brought up by Commissioner Campbell at the PSC meeting Wednesday, the board decided to act to eliminate the benefit,” Brown said.
PSC Commissioner Foster Campbell, D-Bossier Parish, noted that the money Claiborne Electric spent on its directors and executives accounted for about two-thirds of its operating margin – the money left over after the electricity has been acquired and distributed.
But commissioners, who came across the spending while considering requests for rate increases, found that lucrative reimbursements for directors and executives are routine among the state’s 10 co-ops that provide electricity to about 900,000 rural members.
When the cooperatives were established during the New Deal, the idea was to pool enough rural residents together to pay for electricity out in areas commercial utilities, which are allowed a profit, found too costly to service.