FORWARD STEP BACK

Cherryland Electric Cooperative welcomed Eino Lehto as the first cooperative member on November 20, 1939. From that day forward, your cooperative has always been “owned by those we serve” or “member regulated”. Almost 30 years later, when statewide territorial problems with investor-owned utilities became a big problem, Michigan electric cooperatives agreed to fall under additional regulation by the Michigan Public Service Commission. In return, cooperatives received a defined set of rules that have governed over boundary disputes ever since.

In 2008, Public Act 167 was passed unanimously in both houses of the state legislature and signed by the governor in October. This bill gives Michigan electric cooperatives the option to remove themselves from state regulation for rates, billing practices and service rules. Cooperatives will remain regulated by the state for such things as territory, reliability and safety.
The CEC board of directors has decided to move in this direction with the membership. There will be a board meeting on April 20, 2009 open to all cooperative members. The official notice required by law is on the next page. Prior to taking a roll call vote, your board will hear input from any member wishing to make a comment. If you are unable to attend the meeting, we have arranged other avenues to hear your voice. You will find them listed elsewhere in this magazine.

Why do we want to reduce oversight by the MPSC? In the past, I have written about rising costs coming from every direction, local, state and federal. Having the ability to adjust rates or service charges at a local board meeting is an opportunity to save some serious money. A full blown rate case will cost somewhere in the $80,000 to $100,000 range from beginning to end. We start with a request for an increase, go through a long and often arduous process only to arrive at or very close to our original request plus a long list of legal fees and staff time over a period of several months.

Your board and cooperative employees want to take on the added responsibility of future increases simply to be able to reduce our expenses. Some will say that we want this ability so we can raise rates higher and more frequently. Honestly, when I look ahead at the next 5-10 years, I do see higher rates on a more frequent basis. It doesn’t matter how we are regulated. We are entering an economic time in our industry during which rates will be going up. Seeking this ability to determine what those changes will be in the CEC board room is an opportunity to use a tool only recently made available that will help us keep each increase to a minimum.

This mechanism for more member regulation could be left on the shelf. It would be much easier for your board and employees to say, “Not much I can do, the rates were approved by the MPSC” and pass every penny of the associated costs down to the end of the line. We believe strongly that this is simply not the fiscally responsible answer.

We too are cooperative members. We all live in this area. We know we will be questioned at the store, on the street or at the local ballgame. That is part of the deal and simply who we are. We are elected and hired to run a not-for-profit cooperative utility and not motivated to generate excess profits for out-of-state stockholders and high profile executives.

As the title suggests, if approved by the board on April 20th, this change would be a positive step forward back towards a time when we were able to make more decisions at the local board table rather than a hearing room in Lansing for everyone’s benefit.

In a separate box on the page with the official notice if possible OR on a subsequent page, we need to list the following ways for members to give input:

If you are unable to attend the public portion of the board meeting at 9 a.m. on Monday, April 20, 2009 in the basement meeting room at the Cherryland Electric Cooperative Office at 5930 US 31 South in Grawn, Michigan, please take advantage of the following avenues for member input prior to April 20th:
1) Call General Manager Tony Anderson directly at 231-486-9214
2) Send a letter to the cooperative address above
3) Email General Manager Tony Anderson at tanderson@cecelec.com
4) Attend our “drop in” evening at the CEC office on Monday, April 13, 2009 from 4-7 pm
5) Request a personal appointment with General Manager Tony Anderson at a time of your convenience

Topics not covered in this column that will likely be addressed in the April issue of CL in my column or elsewhere MAY include the following:

· Cooperatives are in 47 states and _________ are currently state regulated. We are not alone in member regulation.

· Wholesale power costs are regulated by FERC. 70 cents of every dollar we spend goes to wholesale costs. We are seeking local control to cover the 30 cents we spend locally each month.

· Credit Unions have used the local control piece of the cooperative model to escape problems incurred by heavily regulated private banks

· Municipal utilities are not regulated

· There are avenues to take us back to MPSC if members don’t like the change

· Review profiles of board members found on website

· Cooperatives were left with an “all or nothing” choice when seeking help with territorial issues in the late 1960s. We did not have the option to chose what was in or out of MPSC jurisdiction as today’s legislation provides.