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New law in Colorado provides revises governance for electrical co-ops—and reveals bruised feelings

by Allen Best

Depending upon who was speaking during recent legislative hearings, Colorado’s electrical cooperatives and Tri-State Generation and Transmission are either shining monuments of democracy or darkened corridors prone to skullduggery.

The bill in question, HB21-131, “Cooperative Electric Associations Governance Requirements,” sailed through key legislative committees in both the House and Senate with near unanimous votes. The only significant opposition was in the House, where half of Republicans opposed it. It got unanimous Democratic support. In the Senate, only 2 Republican senators voted against it.

The bill had bi-partisan sponsors. Singing the virtues of their bill to the House Energy Environment committee on March 10, were Rep. Judy Amabile, a Democrat from Boulder whose district also includes Grand and two other counties, and Rep. Marc Catlin, a Republican from Montrose. Both emphasized transparency.

“When you make us guess as citizens, we will always guess wrong, that something is going on behind that closed door,” said Catlin, who represents the service territory of Delta-Montrose Electric. That co-operative had its quarrels with Tri-State before splitting the sheets formally in 2020 with modest words of affection.

Senate sponsors were Faith Winter, a Democrat from Westminster, and Don Coram, a Republican from Montrose

The bill, which was signed  into law law by Gov. Jared Polis on Thursday, had many provisions without controversy.

For example, it amends the deadlines and requirements for notice of elections by electrical co-operatives, providing more breathing room in their timelines. Co-ops must be sure to have written policies governing conflicts of interest and compensation for directors. They must post the rates and their net-metering policies on their websites.

Electrical cooperatives were authorized by Congress in 1936 when federal aid was extended to rural areas to deliver electrification.

Every customer of the cooperative is a member. Further, every member has a right to vote for directors who have responsibility for guiding policy and operations at coops in places like Holyoke and La Junta, Meeker, and Cortez.

In Colorado, they range in size from 2,500 members to 165,000 members. Altogether about 20% of Coloradans, or more than one million people, get their electricity from cooperatives.

This is democracy at its most elemental form, but coop elections have rarely provoked much interest. This continues even during a time of surging interest in climate change and also of profound changes in energy.

This is from the April 30, 2021, issue of Big Pivots, an e-journal covering the energy and water transitions in Colorado and beyond. Sign up at Big Pivots.com.

Bryan Hannegan, chief executive of Glenwood Springs-based Holy Cross Energy, told legislators on April 6 that voter turnout has never surpassed 9% of its 45,000 members in the Eagle, Roaring Fork, and Colorado River valleys—this despite efforts via social media, advertisements, and other means to get members interested.

Electronic voting will be allowed by this bill, a potential boost for election turnouts that rarely draw much interest.

Two provisions were directly aimed at Tri-State, the wholesale provider for 18 of the state’s 22 cooperatives. Together they will require Tri-State to operate more like its member cooperatives and, for that matter, like other elected bodies in Colorado.

One requires board meetings of Tri-State be open to the public, as they have been among cooperatives—at least in theory—since 1983.

“The problem is not all of our members take advantage of that, as Dr. Hannegan has mentioned,” Geoff Hier, director of government relations for the Colorado Rural Electric Association, a consortium of the electrical co-ops and Tri-State, testified before a Senate committee on April 6.

Actually, I’m not sure the doors at local cooperatives were necessarily always wide open. I admit that I never tested the open-door policies of the electrical cooperatives during my 20 years of newspapering in mountain towns. We sometimes even covered sewer and water district boards, but no coops. There were rarely, if ever, rival candidates, nor do I remember controversy.

My impression in recent years—confirmed by a former employee of an electric cooperative—was that co-ops were not accustomed to having people show up for meetings. In some cases, if somebody had business, they were escorted to the meeting for that item, then escorted out. You couldn’t just show up and listen like you can to a town council meeting or, for that matter, sessions of the Colorado Public Utilities Commission.

Tri-State policy

As for Tri-State, it clearly had a closed-door policy. This is despite the testimony of Duane Highley, chief executive of Tri-State since April 2019. At the March legislative committee meeting, he said that members had always been invited to the organization’s board meetings.

Joe Smyth, a Fraser resident, had a different experience, with evidence in e-mails.

“Before Duane Highley became CEO, Tri-State excluded co-op members from attending its board meetings, and even moved to exclude co-op members from its annual meeting in 2019,” Smyth responded in an e-mail when I inquired. “(Highley) may not be familiar with that history, but I’d hope Tri-State staff would provide their CEO with accurate information to ensure he doesn’t present false claims to Colorado legislators.”

Smyth, who has dogged Tri-State and the coop world at a website called Clean Cooperative, had written about exclusion of co-op members at the 2019 annual meeting in a posting on March 21, 2019.

The post includes an excerpt from an e-mail message from Rick Gordon, the president of the Tri-State board: “Our Annual Meeting is not a public meeting. It is open to our member directors, managers, member system employees, and invited guests.”

Was Smyth excluded because his electric account was in somebody else’s name? No, he says, it’s in his name. And he says that Lee Boughey, chief communications office for Tri-State, knew that he was a member of Mountain Parks Electric, because of an earlier exchange when Smyth attempted to attend a monthly board meeting.

(I had attempted to attend the same annual meeting in 2019 but was refused. However, I was not a member of a coop).

Highley’s statement was also disputed in Taos, N.M. “You had to be invited to get into a meeting,” says Luis Reyes Jr., the chief executive of Kit Carson Electrical Cooperative, a member of Tri-State from 2003 until 2016 and Kit Carson’s representative on the board for two years.

This new law makes it crystal clear that Tri-State board meetings, all of them (unless called into executive session by a two-thirds vote, for specific purposes) are open to members and consumers—but also the news media. (The bill does not define what constitutes news media, a phrase with a broad range in the digital era, as witnessed by Facebook “news” feeds).

The second provision aimed specifically at Tri-State has to do with the complaint among some cooperatives that Tri-State managers have stepped over the ethical line in attempting to twist the arms of board members from the individual coops. In this view, told often among those critical of Tri-State, members on the Tri-State board were told they had to vote for the interests of Tri-State first and foremost.

This grievance among some cooperatives with Tri-State flared during the House committee hearing in testimony from cooperative members from Larimer County to Montezuma County.

Guinn Unger, a former board member of La Plata Energy, said representatives of member cooperatives at Tri-State are told they have a fiduciary duty to Tri-State “and they can’t vote in the best interests of the cooperative they represent.” Others, mostly with less direct knowledge, said much the same thing.

On the record

Nobody offered specifics. I made inquiries. I was told, off-the-record, by individuals from two separate coops that Tri-State management had in fact made a habit of pressuring local representatives to vote in ways that benefited Tri-State, not their member coops. But, when I pressed for on-the-record statements—well, the co-op members never got back to me.

The strongest statement I got was from Reyes, the CEO of Kit Carson. He recalls lectures from a Tri-State attorney about the need to vote for what was best for the interests of Tri-State as a whole as opposed to the interests of Kit Carson. “You are wearing your Tri-State hat today,” he says he was told.

Luis Reyes Jr.

Reyes describes softer but no less muscular tactics of intimidation.

“They isolate you, and all of a sudden you’re not one of the boys. You’re not one of the crowd. You get the visit from the attorney reminding you of your Tri-State responsibilities,” he says. “It does wear on you.”

Most of the time, the interests of Kit Carson as an individual member and those of Tri-State were the same. However, Kit Carson bucked Tri-State in several cases. One was on rate increases, and the second was Tri-State’s decision to buy into the coal-burning Springerville coal plant in Arizona. That was in 2006 or 2007. In both cases, Tri-State staff failed to prove to the satisfaction of Reyes the necessity of the actions. The response was some legal saber rattling, though nothing happened.

My conversation with Reyes occurred in mid-April. A month earlier, I had inquired of Tri-State after the first legislative hearing. Mark Stutz, a company spokesman, responded with this statement:

“The original assertions concerning fiduciary responsibility by any board member to Tri-State are without merit, and show a lack of understanding of Colorado statutes. It is not true that Tri-State Board members are required to represent the interests of Tri-State and not the interests of their local co-op. Colorado law requires corporate directors to exercise their fiduciary duty to any and all corporations on whose board they serve. That means that Tri-State directors who are also directors of their local co-op must exercise their fiduciary duty to both Tri-State and their local co-op.”

At the Senate hearing on April 6, Highley spoke to this most directly upon questioning from Sen. Dennis Hisey.

“They are there to represent the interests of their distribution cooperative and their friends and neighbors, and they do that, while simultaneously representing the interests of Tri-State. I think this bill clarifies that,” answered Highley. “They are not to give a priority to either organization, and we believe that‘s how that should work.”

The soon-to-be-adopted law specifies that “if a director serves on the board of both a generation and transmission association and a distribution association, the director owes fiduciary duties to both associations and shall not be required to give priority to the duties the director owes to one association over the duties the director owes to the other association.”

The take-away here is one of heightened accountability. The first big step was in 2019, when legislators required Tri-State to submit electric resource plans to the state’s Public Utilities Commission, as is required of the investor-owned utilities. The open meetings clearly is another step.

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