Make OPALCO Power Affordable Again.

A day after the OPALCO board approved an emergency 10% increase in our electric rates, effective at the start of this month, its management issued a press release announcing the "Temporary Revenue Recovery Add-On." In it, general manager Foster Hildreth "explained" that the emergency increase was needed because "Members have not been paying their full share" of OPALCO's costs. 

It is hard to imagine a more brazen -- nor less accurate reason -- for our electric rates having been increased 10% just four months after having been increased 12%, and these on top of sequential 6% annual increases. The real reason is that OPALCO has so badly mismanaged its spending that it needed this latest increase to try to get right with its primary lender after violating terms of its loan agreement.

While OPALCO's board describe the latest increase as temporary, it is working on a new rate plan for 2016 which would increase rates as much and as often as necessary to cover any and all expenses, a move required by a "corrective action plan" to satisfy its lender.

OPALCO's financial problems of result of bad energy-use forecasting, large increases in debt to finance its entry into the Internet/broadband business and significant increases in operating expenses, all of which have produced board-approved budget over the past 18 months that have tumbled into the red and lead to the violation of the loan agreement.

Members, on the other hand, have been paying our bills in full and on time, even though those bells now include the cost of creating the infrastructure for OPALCO's Internet/broadband venture. Management has justified passing those cost on to all members by including them in its core "true cost of service."

When OPALCO begin making these Internet/broadband investments, which it said were necessary to upgrade the electric-grid "backbone," it said they would more than pay for themselves. In fact management calculated those "direct and indirect savings" down to the penny -- $29.42 per member per year.

However, electric-distribution expenses instead rose 18.6% in one year and OPALCO's "general and administrative expenses" rose 19.4% over the same. Are those called savings?

Rather than address the root causes of its financial problems, management and the board have chosen to simply raise rates to cover its ever-increasing expenses. And now it is working on a similar, long-term rate change it is calling "decoupling." Like this latest "emergency" rate increase, it would guarantee that OPALCO will have all the revenue it needs to keep its lender from calling the loans or raising interest rates as while continuing to spend without limit. The only "decoupling" will be us from our wallets. 

If this weren't troubling enough, OPALCO soon will need to begin borrowing upwards of $45 million to replace submarine marine electric cables. These are really important, as you might guess. But rather than a position the cooperative to be ready for that financial impact, the board chose instead to spend millions to jump into the Internet/broadband business, to serve perhaps one-third of its members, and in the process of filing it loan covenants.

Neither the board nor, more importantly, we cooperative members, have been well served by this gross mismanagement, but it is only the members who will pay. One might presume the board, under the circumstances, would attend more closely to its oversight and management, or at least its access to the membership who showed up in big numbers to complain at the board's June 18 meeting.

But no, that's not the board's response. It's responses is to cancel its July meeting and not meet -- at least in public -- until Aug. 20. Having tried to blame its problems first on "global warming" and then on its electric customers, this may give management time to come up with a new excuse for its own failures. 




OPALCO Board's Response to Trouble? Vacation

By Alex Macleod



Thursday, July 21, 2015


Make OPALCO Power Affordable Again.

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