The newly named interim chief executive of Valley Electric Association Inc., Richard Peck, spoke to a packed room at the co-op’s conference center last week, laying out his agenda to turn the organization around, admitting that tactical errors were made in the past.
Peter Gazsy, director for Valley’s District 1-south Pahrump, resonated on Peck’s sentiment that mistakes were made in the past during a more than a two-hour-long annual District 1 meeting at Valley’s conference center at 800 E. Highway 372 on March 7.
“I have deliberated many hours with my fellow directors, and we have adhered to the best business practices of the industry and the facts that we have been given,” Gazsy said. “Have we always been right? No, to be sure. We have made some mistakes. We are human. But to be fair, they have been few and far between — most of them we’re able to correct. I thank you for the opportunity you have given me to serve you.”
But not every member-owner of the co-op supported sticking by the current board.
Several people spoke out about rate hikes on broadband in February and the 9 percent increase in energy rates for residential customers and the $5 increase in Valley’s basic service charge starting on March 1. Community members lined up to take their turn at the microphone set up in the rear of Valley’s conference center during the District 1 meeting, some questioning other things such as where the money from the transmission sale went.
Steve Morrison, chief financial officer, tried to answer some of the questions surrounding the rate hikes during the meeting.
Morrison was recently named acting chief executive following Angela Evans, who is on administrative leave pending an outside, third-party investigation, according to Valley. Morrison was succeeded by Peck, who was named interim chief executive at the end of February.
Evans was arrested on suspicion of embezzlement on Feb. 26 and booked into the Nye County Detention Center. Her arrest surrounds allegations that she charged $75,000 to the co-op to have work done on her personal residence in Pahrump.
Morrison explained that prior power purchase agreements were made during the recession in 2008. Those agreements kept rates low in the early part of the contract, but, per these contracts, rates were pegged to rise in their latter years.
“Then the rates would escalate because they’d have to go up,” he said.
Valley worked to keep these rates low.
“As years went by, you’d get close to those escalator rates, they would get another version of that power contract to keep rates low,” Morrison said. “The intention there was to not pass on rising costs to the members. So by leveraging these contracts several times over, when I was here, last year…the end of 2017, we knew we were coming up on another escalator, and costs would be a considerable difference.”
Morrison also spoke about the co-op’s revenues and how they weren’t meeting the levels they had anticipated.
“Revenues aren’t where we need them, costs are increasing and we had a power contract that was going to escalate, increase our costs considerably, and we had to make a decision,” he said. “We had the luxury, if you will, of having the 230 KV (kilovolt) sale that put cash in the bank. That was the decision to use money from the sale to get right.”
Morrison went onto explain how the co-op also decided to lay off more than a dozen employees, from various departments, and did other cost-cutting measures at Valley.
Though Valley has begun to speak about what led to decisions it has made in the past, some community members said these items weren’t explained in earlier meetings.
“We weren’t given the whole picture,” an unidentified woman said at the district meeting. “We are not being transparent. I still think we need a co-op. I think we need it done right.”
She went onto state that the current board needs to be re-voted on.
“The people that are there, God bless you all, but need to be replaced,” she said.
In recent weeks, a group known as VEA Members for Change has risen up with a mission to remove the current board of directors of Valley. The group’s organizers reported that they are nearing 900 signatures on its petition to remove the current board.
According to organizers, the group only needs roughly 1,800 or 10 percent of Valley’s members to get a special meeting called where the current board could be removed and replaced by a vote of the membership.
Peck defended the current board during the meeting.
He said the board “learned of the issues only after the former CEO left. They went ahead and did some really neat things. They hired an auditor to make sure the financials were headed in the right direction. They weren’t. Then they turned around and said, ‘now what do we do?’ Well, they had some tough decisions to make in the latter part of 2018, and again, the impacts. No one likes to lay employees off.”
Peck continued: “They made the tough decisions. Yes, they made promises. But they have to because of the bankers. You have to make commitments to bankers, and you surely don’t want the bankers running this utility. I’m extremely proud to be here. I want to hear your comments. I want to hear your complaints. You are the solution. You are the solution to the direction that we want to go.”
Peck has stated that he wants to bring transparency to the co-op’s members. In recent days, financials and other information has been put online.
Peck is a 47-year industry veteran and has helped other troubled co-ops in the U.S. He lives in Kenai, Alaska and is from the Pacific Northwest.
This story is Part I of II in a series on Valley Electric Association.
Contact reporter Jeffrey Meehan at email@example.com