Chugach Consumers

GOVERNANCE PROBLEMS AT CHUGACH ELECTRIC -- SECRECY
Revised:  4/17/07

In contrast to its sister utility, Anchorage Municipal Light and Power, Chugach Electric operates in an environment of almost total secrecy for many items of substantial discretionary spending it deems controversial (such as labor contracts).  In contract to the Anchorage Assembly (the governing body for ML&P), Chugach has dozens of executive sessions per year which are not recorded nor is any record disclosed. 

Even though it is covered by the open meetings provisions of the Alaska Electric and Telephone Cooperative Act a curtain of secrecy has descended over Chugach Electric Association that has made it virtually impossible for members to meaningfully participate in the affairs of their cooperative.  Even minority pro-consumer directors on the Chugach board itself are now blocked from discharging their fiduciary duties. It's being done by management withholding of essential information and acting as if Chugach was a closely held family-owned private company instead of the politically-controlled public body it obviously is legally.

65% of controllable operations costs are labor. Management protects the IBEW Union and the layers of bloated non-IBEW related costs, overstaffing etc. by suppressing information the public would need to make informed judgment on candidate positions in cooperative elections which have become cesspools of lies and misinformation that flood the airwaves from paid political slime consultants hired by Chugach employee groups like the Chugach Action Committee and assisted by the IBEW Union.  Chugach management works with them to withhold information that would clear the air. The withheld information also makes impossible any timely, informed comment and input to the board on important matters that affect $millions in electric rates paid every year. Now even deliberations within the Chugach board itself have become severely impaired if the subject is related to verboten discussion of IBEW Union labor costs.

COOPERATIVE DEMOCRACY HAS CLEARLY BECOME A SHAM at Chugach Electric over the last year.

Electric cooperatives like to promote themselves as democratically governed businesses owned by the members they serve. How does that jive with Chugach Electric suppressing public debate and key economic information on bloated Chugach labor costs that prompted a Superior Court restraining order against the Chugach board?

Chugach Electric management, with the acquiescence of the Chugach board pro-IBEW Union majority, has now sued Chugach Consumers and former Chugach board president Ray Kreig to suppress benchmarking and labor economic studies from the Regulatory Commission of Alaska, their very own regulator! This is information that actually should be made public in a cooperative.

In the last year, as the stunning amount of economic rent money involved in the new labor contracts and consequent rising pressure from the IBEW Union was exerted, Chugach board majority director avoidance behavior has been truly incredible. There have been meeting boycotts, lawsuits, plainly anti-democratic and dictatorial behavior. Anything and everything to avoid acknowledging the $millions in Chugach ratepayer money burned on the board table each year.  See events chronology below.

Board secrecy policy (#128) was put in place 10/9/02 after Chugach management was caught and confronted with suppressing labor cost information from the Chugach board and the public earlier in the year. The policy was intended to strengthen management power to stifle accountability and reduce the risk of its improper actions being discovered.  A week later they were caught lying about the cost-benefit of the Southern Intertie. This came to light only because former Chugach board president Ray Kreig maintained personal files of his deliberations on the CEA board. Kreig stated in testimony on 1/2/03 that had he acquiesced to Board Policy #128 and Chugach management intimidation, the best study ever done on the project economics of the Southern Intertie (the "secret" 2/98 DFI report) would have never seen the light of day. 

The board secrecy policy (#128) wanted by Chugach management and passed by the board in October 9, 2002 is absolutely inappropriate for a publicly owned entity.  Its existence threatens board members with legal action if they don't keep quiet.  Confidentiality is legitimate when certain personnel and litigation matters need to be considered in closed session.  But Chugach Electric practice in the last few years under general manager Gene Bjornstad and after 5/02, Joe Griffith and now Bill Stewart goes far beyond reason and is an abuse of provisions in the co-op open meetings law.  This is not good public policy and reform is needed, including change to the statutes.

BOARD EXECUTIVE SESSIONS AND CONFIDENTIALITY

Alaska is the only state where cooperative board meetings are covered under an open meetings statute.  The Alaska Electric and Telephone Cooperative Act allows only three types of executive sessions:  

(b) No closed or executive sessions shall be held except to discuss:
1) Matters the immediate knowledge of which would clearly have an adverse effect on the Association's finances;
2) Subjects that tend to prejudice the reputation and character of a person; however, that person may request a public discussion;
3) Matters discussed with an attorney for the Association, the immediate knowledge of which could have an adverse effect on the Association's legal position (as described in Chugach Bylaws Art. VI; Sec. 5).

[Compare to Alaska Statutes covering state and local government open meetings] 

During the process of board discussion of the IBEW Union labor contract extension on March 20, 2002 former president Ray Kreig's presentation during a regular board meeting was stopped by Chugach Attorneys when he tried to discuss savings identified to previous Chugach boards.  All appearances are that Chugach management had not given the current board that was responsible for making the decision the benefit of that information.   

Also, it was paramount that the information be released to the public by the board so Chugach members could make informed comments to the board.  

November 2002 note:  Chugach management has still not released any of the requested information and it has recommended procedural changes (including Board Policy 128) that will further tighten the ability of members to know important details of what is being considered by the Chugach board and what has happened in the past.  The attempt to muzzle even former directors for the rest of their lives is astonishing for a member-owned public cooperative.  

All of this will dramatically reduce the accountability of Chugach Electric to its membership: electric consumers.  Extensive benchmarking studies comparing Chugach economic and performance efficiency to the world's best operated electric utilities remain secret years later from the membership that paid for them through their rates.   

Chronology: 

 DATE COMMENT
10/16/07 "SLAPP* SUIT" AGAINST CHUGACH CONSUMERS BY IBEW UNION BACKED DIRECTORS AND CHUGACH MANAGEMENT IS OVER
5/16/07 Revision of Board Policy 128 - Confidentiality *
2/21/07 Pro IBEW Union majority board Amends Board Policy 128 again to put back in the improper seizure of directors records and decisional documents.
12/22/06 Chugach Electric sues Chugach Consumers to suppress documents submitted to the courts and to the regulators!  CEA management desperation to silence discussion of labor contract and other waste at the utility deepens.
12/6/06 Chugach Electric suppression of public debate and key economic information on bloated Chugach labor costs prompt Superior Court restraining order against Chugach board rushing through labor contract by C. Stowers, Superior Court Judge
4/11/06 - 4/27/06

Extreme and unprecedented measures taken by Chugach board to prevent public disclosure and debate of reform director motions to inform membership about costs of labor contracts and options in the negotiations.

Chugach board Chairman Alan Christopherson refuses to permit even the making of motions by Directors Uwe Kalenka, Ray Kreig, Elizabeth Vazquez. Two board meetings were boycotted by a coordinated quorum in apparent violation of open meetings statute. Director Kreig ordered by Chairman not to discuss the motions even though all were in an executive session of the board!! Ratepayers consequently knew nothing in the critical election going on about the contract negotiation issues. IBEW Union spends $250,000 and reclaims board majority in the information vacuum.

Boycott by coordinated quorum: The four directors of the majority (Chairman Christopherson, David Cottrell, Jeff Lipscomb and Bruce Davison) just about had to coordinate their move not to show up for the two board meetings boycotted. It would have been very risky for their objectives not to. It could not be left to chance because if any one of the four were to have "not gotten the word" and come to the meeting it would have made a quorum and the motions then could have been made and the votes would have been there to pass them (Vazquez, Kreig, Kalenka) and release the information to the public. So it is extremely likely there was coordination between the four of them and this is a violation of the illegal serial meetings aspect of the open meeting provisions of the Alaska Electric and Telephone Cooperative Act. See discussion under Section III.3. of Attorney Gordon J. Tans Alaska Open Meetings Act Guide.
4/27/06 Chugach employees spend $250,000 with help of the IBEW Union to take back control of board - now a 5-2 pro IBEW Union majority.
2/15/06 Board Policy 128 amended to remove improper seizure of directors records and decisional documents.
7/27/05 4-3 pro-consumer majority returns to Chugach board with the appointment of Ray Kreig.
11/20/02 Chugach Electric management caught lying about the Southern Intertie:

�Another very important example of CEA abuse of executive session secrecy is the Southern Intertie. CEA management and the IBEW Union heavily promoted this uneconomic transmission project to the CEA board when [Ray] Kreig was president. He had a thorough cost-benefit study done which determined the project was not in the best interest of CEA members. That study was presented in executive session to the CEA board in 1998. Unbeknown to the board, CEA management had the same consultant issue another study to the public EIS process that more than doubled the benefits to show it to have a net positive value. This deception was not discovered until four years later (Exhibit M) when then ex-CEA director Kreig matched the public version of the report to the one he retained in his  personal files.� [from Count 41 in Complaint of Chugach Consumers to the RCA, U-06-135]

This is described in an OpEd in the Anchorage Daily News on 1/21/03. In the resulting uproar, this white elephant transmission line project was canceled and $70 million that otherwise would have been wasted was saved. 

It should be clearly understood that Chugach Electric�s draconian efforts since these events to seize directors records and suppress Chugach Electric decisional documents on major issues would have prevented Chugach management duplicity on the Southern Intertie from ever having become known.

10/9/02 Confidentiality policy for Board members and employees.  New Board Policy 128 - Adopted unanimously by board without discussion includes seizure of directors records of executive sessions and documents provided for their deliberations.  
4/17/02 Agenda item to request release of necessary documents related to consideration of IBEW labor contract extension.   Pulled, not acted on.  Labor contract approved anyway.
3/20/02 FORMER BOARD PRESIDENT SILENCED -- Ray Kreig's presentation and publication of information to members stopped by Chugach attorneys.  

 

Please send comments or questions to: 
CHUGACH CONSUMERS, ANCHORAGE, ALASKA, 99510-1822
email:  Chugach Consumers

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