Notes from SDCEA Board Meeting 8/24/22

By AVEF 

Public Comment: 

Sandy Long – Encouraged the board to have public meetings on their work plan for 2022-25

Steve Reese objected to SDCEA’s lack of transparency

Tom Plant encouraged the board to look at incentives in the IRA and ways in which they can benefit. Also, to be a hub for information around incentives for homeowners and commercial businesses in the IRA. Finally encouraged discussion with Tristate about the proposed 5% additional generation for community solar projects which was rejected by the ALJ at FERC - their objection was based around a one-sided modification of the contract, so there is an opportunity to investigate a modification of the contract to increase that allowable percentage, particularly in light of the incentives in the IRA that could save a great deal of money for customers. Dan Daly wondered about the timeline on the state level. Tom replied that they are just in the beginning stages of the rebate program and we all need to wait for the formula they will use for percent distribution numbers. The state will launch their program and then the Fed will release the money.

Rich Shoemaker invited the board to participate in the upcoming solar Green Home Tour on Saturday, September 17.  Rich’s house in Buena Vista will be on the tour. He also invited them to come to a presentation by Tom Plant, Senior Policy Advisor for the Center for the New Energy Economy, and Jeff Lyng, Environmental Policy Director for Xcel at the A Church (419 D Street in Salida).

SDCEA Director Nick Hellbusch asked if SDCEA will head up an EV program. The answer from Paul Erickson and Sarah McMahon was that a new rate structure is needed first, and that an EV program would be integrated into the rate structure. EVs will be good for SDCEA if done right where people charge after 9 pm. If everyone charges from 5-9 pm, it will hurt SDCEA.  They are talking with a 3rd party vendor about a type of charger.

Consent agenda discussion about bad debt write-offs declining which is a good trend. Questions about disconnects and the estimate was about 85/month. Discussion around whether or not they need to approve the debt write offs or just get the report - decision was that in the future they would just receive this as a report.  

Director orientation: 

Casey presented: Fiduciary duties of corporate directors - the board’s duty is to the corporation and not to the membership even though the board is elected by the members, because the board has fiduciary responsibility only to the corporation. 

Fiduciary Duties include:

  • Duty of Care - Make the best possible decision, informed and in good faith; The best decision may not necessarily be profitable. Written reports are necessary to document proper care.

  • Duty of Loyalty

  • Duty to Not Usurp Corporate Opportunities

  • Duty of Loyalty with respect to Associated Organizations- If an SDCEA director serves on another associated board as well, he or she has a duty to both boards. A special election vote of the members might be necessary to resolve a conflict between the interests of the two boards.

Dan raised a question about whether or not the board has a fiduciary duty to address climate change. Casey has not looked at whether there is any case law on that - shareholders have challenged environmental decisions by boards and courts have said that they can make those decisions if they believe it is in the best interests of the corporation. Whether that extends to the responsibility to the society at large, he hasn’t seen anything. The basic question is “is it in the best interests of the corporation?”. 

Dan said, I think the argument is that climate change is an existential issue for the organization. Casey says if the board thinks it’s in the best interest of the corporation, then the board has the ability to act on it. 

Paul talked about directors wearing two hats, Charlie voting to increase costs on the coop on the Tri-State board. Looks like there is an inherent baked in conflict of interest. From the outside that looks like a conflict of interest. Charlie acknowledged that it doesn’t look good, but if our supplier goes under, that doesn’t benefit the utility either. 

It was also clarified that the minutes are for recording what was done not what was said - The lawyer suggested that it would be an impediment to discussion if the discussion were to be recorded and reported.

Nick asked about what information he is not supposed to be able to share with the members. If there are any guidelines. Casey said, these are public meetings and open to public consumption, Executive sessions are not. Nick asked:  For example, the rate study - can we share that? Casey: That’s something for the board to determine what can be shared with the members, because it is a part of the “sausage making”. You don’t want to be in a situation where you’re disclosing all the information that will go into the decision-making process and somehow sabotage the process. 

Nick: I feel like giving more information will generate more and better ideas. I guess we just need to decide on a case-by-case basis. 

Casey: there are some things that the coop has to provide by law. The internal deliberations of the board, typically are kept in house and the information provided to the shareholders is provided in a way that includes messaging, protection of the corporation and is filtered for public consumption. 

Nick: I felt that the information from the PSE presentation was not enough information to make decisions. It didn’t have enough information to be helpful to an active engaged member. This could be an issue in coming months.

Casey: The basic question is - is it in the best interests of the corporation. Board needs to speak with one voice. “Remember where your loyalty lies”.   The Board should decide what information is confidential versus open to the public.

Chateau Chaparral Project

Started two years ago. CC built out their own little utility system, and had many problems recently (fires, unsafe conditions) SDCEA went to talk with them to fix it - They are nearing the completion of a $1.25M project to update the system. All but 110 are connected to the new system, of the 110, 60 they are in communication with, there are about 50 they haven’t heard anything back from. On Sept 6 they will energize the whole system and at that time if those 50 are not connected, they won’t have any power. They are going to make one last effort with certified letters.  Nick asked about the payback and it was estimated at 10 years but sounded like the project was driven by reducing potential exposure, not solely on financials.

 

After lunch

  • Time was spent recognizing several employee work anniversaries

  • There was a discussion regarding various potential lending institutions (including the Rural Utility Service at USDA). No action or decision taken.

  • Resolution #1 2022—25 Construction Work Plan approved.  Dan asked about the request in public comments to have a member presentation on the Work Plan.  It was discussed that the Executive Summary was not confidential.  (Due to Webex problems, we were not able to see the Executive Summary.) Dan asked Paul to come back to the Board with a recommendation on what is appropriate to share.

  • Selections of delegates for particular committees.

  • Approved a donation to the BV Heritage Museum

  • Amended policy C-6 on personal identifiable information

  • Approved some minor changes to E-27 Drug & Alcohol policies

 

Director Roundtable

  • Dan had a conversation about the value of solar with Steve Reese. Nick - why do we want to limit the size of solar on a members’ house, if we’re going to buy that excess power at 2¢, why would we want to limit that? [sound was very bad here and hard to hear, then the audio went completely silent.]

  • Attorney Casey Martin discussed a conference he attended, including a lot of talk about national politics. 

  • Paul went to a meeting with CREA about cyber issues. Russia and China are practicing on small utilities. That’s what happened at DMEA (Delta Montrose Electric Association) with ransomware. 

  • Finalized COO (Chief Operations Officer) selection, Gary Kelly was selected. Starts Sept. 6.  

  • Paul is sitting down with each employee and discussing a book project. It appears that Paul assigned a book “Energy Bus; 10 Rules to Fuel Your Life, Work, and Team with Positive Energy.”

  • Paul is meeting with rate consultants on Friday, August 26. They are done with the “Science” part and arguing over the “Art” part now.

  • Paul: I will fully admit that communicating new rates is more important than the changes themselves. (He referred to “prickly issues like rooftop solar.”) The changes are going to happen. We’re going nice and slow, we’re being deliberate, we’re going to roll out a suite of rates and we will communicate about it. I like what I’m seeing. We’re sticking with the old structure until we’re ready to roll out the new rates. Directors will be experts on the rate structure before we adopt it. We will prioritize communications. (AVEF Clarification: Directors have the ultimate authority to adopt, modify or reject the new rate structure, not the CEO.)

  • CAO (Chief Administrative Officer) report - they are rebuilding the website and Governance documents won’t be password protected. In terms of member communications, they have been busy with other things and struggling to find time. SDCEA plans to focus more on channels to get information more quickly than the magazine Colorado Country Life that takes 2 months to get something out. 

  • In terms of net metering - on track to surpass 100 systems in 2022. Paul: We’ve always said you may not like our entry fee, and we were the first to charge that fee, but what you get in exchange is master facilitation - that’s what we are, master facilitators on net metering. We are agnostic to net metering.

  • When asked what it costs now to net meter, no one knew the exact cost of the fee, the extra meter, etc.

  • Revenues are 2.2% under budget, expenses are 2.9% over budget.  Revenue shortfall attributed to the weather not being that cold.

  • Community room is available again for group meetings. 

  • There is no board meeting in September. Next Board meeting is October 26. (An educational workshop on September 6th and 7th.  Board members will meet in work committees on those dates, this is not open to the public.)