Art wrote, “Like most companies (or people), getting beaten up in public is one’s least favorite avenue of change.”
Art has chosen an interesting metaphor to describe the relationship between the electric co-ops, like SMPA and DMEA, and Tri-State, which the 44 co-ops own and control. I was especially taken by the “beaten up” description, which I know is accurate, because I’m a long-time (1983) member of the DMEA board and a strong supporter of DMEA’s refusal to extend its Tri-State contract.
Writing here on my own, and not as a director of DMEA, I want to explore the implications of Art’s column.
I voted to oppose extending the contract 10 years beyond its present expiration in 2040 on a business basis, rather than because of hostility to coal-burning power plants or any other global consideration. DMEA has lots of potential local sources of electricity. We are still a rural area, with unused falling water in our irrigation systems, sawdust from mills, methane generated and exhausted to the atmosphere during the mining of coal (DMEA’s service territory produces 1.5 percent of America’s coal), and enormous amounts of dairy cow manure (it takes three cows to produce enough electricity for two houses).
I believe that if DMEA were free to do so, it could eventually buy much of its power locally. Unfortunately, the Tri-State contract limits us to buying five percent locally. I also believe that the world of electricity is changing rapidly, and that building a power plant in Kansas, outside of Tri-State’s enormous (250,000-square-miles) service territory, may turn out to be like Napoleon invading Russia.
You’re stretching your supply chain a bit far. To take a current example, the state of Kansas is making heavy demands on Tri-State, and has thus far, months after various deadlines, failed to issue an air permit.
I have other business reasons for my decision: the way in which Tri-State has chosen to finance the plant, its slowness in adopting load management and efficiency, the fact that it is not regulated in any of its four states, and its resultant lack of transparency. DMEA hired an expert last year to examine Tri-State’s plan to build three plants. We saw that as part of our fiduciary duty. Ultimately, the member co-ops bear the financial burdens of Tri-State’s decisions. But DMEA had great difficulty in getting Tri-State to give the expert the information he needed to make an informed judgment on the $5 billion plan. Which perhaps was just as well, since a few months later two of the plants disappeared as inexplicably as they had appeared several years earlier.
I don’t argue that my vote to not extend the contract was the right one. I don’t argue that Tri-State’s changing resource plans are wrong. I only argue that I cast my vote based on the best information I had and my best judgment I also cast my vote that way because my vision of the future has DMEA encouraging the creation of local power production, and therefore of local jobs and taxes. This year, DMEA will send $35 million to Tri-State to support distant power plants and its bureaucracy. This is an enormous burden on two relatively low-income counties.
As I understand my fiduciary responsibility to DMEA’s 30,000 member-owners, I had many reasons to vote against contract extension and very few to vote for it.
So why does Art, a savvy man who has been a county commissioner for many, many years, write of non-signing co-ops “getting beaten up in public”?
DMEA still has 33 years to go on its sole supplier contract with Tri-State. DMEA will continue to buy five percent of the power that Tri-State sells to its 44 member co-ops for over three decades. (DMEA is among the largest Tri-State customers, and on a customer-supplier basis, should be among its most influential co-ops.)
Why shouldn’t DMEA, with a 33-year-long contract and $35 million a year in payments to Tri-State, have as much influence as the 43-year customers, most of whom are much smaller? Why would people like Art assume, accurately, that the two non-signing co-ops, DMEA and Kit Carson in N.M., will be ostracized and lose their influence on the one-cooperative, one-vote Tri-State board? What mortal sin has been committed beyond honest disagreement with a major policy? Thirty-three years of guaranteed power purchasing is still a lot of time to pay off debt.
To take an example, do the other two San Miguel county commissioners beat up Art in public when he is on the losing end of an important 2-1 vote? My guess is that they don’t. And my guess is that Art wouldn’t help beat up the losing commissioner if Art were on the winning side.
But after presumably talking to the SMPA directors who chose to sign, Art in his column accepts as normal this bizarre situation. And then he uses the threat of being beaten up and losing influence as a rational for SMPA to extend its contract.
I do not have the space to explain why Tri-State functions in the dysfunctional, bully-boy way Art accepts as normal. Let’s just say that Tri-State’s internal politics makes the U.S. Congress look like a student government. The interesting thing is that the co-ops themselves, dispassionate observers like Art who I know is trying to be helpful, the four state legislatures see this behavior as acceptable. For those with long memories, it is Kitty Genovese all over again.
I conclude by saying that there are worse things than getting beaten up in public. One of those worse things is making a bad business decision for your community out of fear.