Perhaps some intelligent discussion on these pages of the issue at hand at the Lake Region Electrical Cooperative's June 9th Annual Meeting would be beneficial to Cooperative members? Let's get the discussion out in the open.
LREC News Flashes with background material
18 hours ago
16 comments:
I think we should hear Kathy's response to this issue.
Option 1=will help keep rates low
Option 2=we will be paying for this in the years to come in our rates.
Almost all cooperatives use Option 1, why do we need to be different? Look through the "Watchdog retoric" and see what is the better option for the cooperative.
Good Morning, Anonymous!
It appears that you may have been served LREC legacy koolaid. You are singing from the old hymnal, and the beliefs you have exist because of the spin on the capital credit messaging that you have been served. (The kind of messages that state: "financial experts agree" on capital credit position, when in fact, those particular financial experts were primarily a select panel of electrical coop management that were vested in their preference for net-present-value outcome.) Please consider that the "news" you have received from LREC was filtered for your consumption--the financial statements in the annual reports tells a clearer picture.
The bigger picture issue is that Lake Region Electric Cooperative has lost $2.5 million annually through out-of-control spending, increasing long-term debt and dwindling equity. The topics and trends that have caused this financial decline have hidden in the shadows because the capital credit debate has been served to the members instead.
The past 10-15 LREC annual reports contain comments that "things are great at LREC--we had another terrific year". The financial summaries in those same documents tell the facts of the dwindling financial condition, if you read further. (Seriously--$2.5 million more debt each year.)
The messaging you have been provided on the cost of capital credits paid with EITHER option 1 or option 2 is misleading -- the fact that we have slipped several additional years behind in returning our members' capital credits has been hidden among the management's messages taking issue with face value vs. net present value, when the cost of any capital credit payuot can be budgeted and equal. ALL cooperatives will do better by paying capital credits in a 10-year return cycle, while we have now slipped to 25 years because of our financial state. The capital credit debate, in my opinion, exists to distract members and keep them from paying more attention to the bigger financial picture.
What has been missing from the information you receive is available by looking at your LREC annual reports. You can see that the amount paid out each year for capital credits is recommended by management. In last year's annual report, you can see that management recommended a value of $600,000 capital credits to be paid out. You learned at district meetings in February that the actual amount paid out was closer to $400,000.
The capital credits for estates paid at full face value in any one of the years going back to the beginning of the cooperative has been but a small fraction of this annual capital credit payout.
The idea that choosing either option 1 or option 2 would be financially challenging is simply misleading, and I hope that type of miscommunication is in the past. The cooperative members simply need to determine if paying capital credits to estates at full face value as they had since the beginning of the cooperative is what they prefer to do for our life-long supporters who helped build the cooperative. Then, it will be up to the cooperative's leadership to make that payout fit within the budgeted amount of capital credit distributions. The board of directors has agreed to take the members' advice on this, and I will support whatever direction the members choose.
On a more personal note, I do believe that our members interested in the financial picture overall need to review some of the collective facts of the declining state of our coop. I can provide a snapshot of some of the bigger issues that hide behind the public discussion of capital credits if anyone is interested. I have done a summary of the financial factors from the annual meetings to show the trends -- these are the big, cancerous issues that are degrading the foundation of our equity. Just let me know if you would like to see additional info on that, as it seems you, too, are genuinely concerned about LREC's financial health.
Thanks again for the opportunity --
Kathy Josephson
Having a board member on my electric cooperative who is only trying to defend the dying wish of a dead man is not someone I want representing my best interests. When their only agenda is hate and revenge it seems they would be blinded by those emotions and not represent what is best for the district.
Thank you for bringing all this to our attention Mrs. Josephson. The current board of directors make it sound like we are in fine financial standings. Most of the directors have a year or less experience except the board chairman and the directors in district 5 & 6. We need to hold this board accountable and thats why my vote will be for you. Lets clean those guys up.
anonymous said... "Most of the directors have a year or less experience"
Wait a minute? How long has Mrs. Josephson been a board member? Was she elected? How does she know the current board members are stealing money? And why does she allow this to continue? Or is she cleaning house? I am confused.
There's always a conspiracy by someone in everything in some people's eyes. I will vote for the challenger.
The topic is the vote on capital credits. The question is how will you vote, not for whom. Further comments on the candidates will not be published. When 56572 receives more information on the candidates in both Districts 1 and 6 we might post the credentials of all four candidates. Then your candidate comments will be welcome. People are confused on the capital credit question. 56562 is seeking clarification and comment from proponents of both options.
I can't understand you people that do not think we should get back the money we have comming to us.
Who cares? It's only money. You should spend your time hugging your kids and sitting outside admiring nature. None of this matters in the end.
It would sure be nice to hear the option 1 side of this issue from someone knowledgeable. (the present system) It would also be nice to hear from someone from LREC regarding the differences because I'm sure there's another side to this.
Unfortunately, Kathy appears to show no confidence to the past LREC administration or board. Nevermind we have seen huge improvements in customer service and reliabitity with this board. We have seen a level of service we have never seen before. Change costs money. I can't help but reason that spending money, which some claim was "out of control", didn't account for the great level of service we get from LREC. The prior administration and board are part of this reason. Do we want to go back to the good old days? Think about what is good for the cooperative once both sides of the issue are brought forth.
Good Afternoon --
I am responding to address the assumptions made about how I think -- by "Anonymous" -- May 23, 8:31 a.m.
I have significant confidence in members of the current board--those who ask questions of practices and strategies that seem outdated, and who share their business and financial acumen for the benefit and direction of the cooperative. It is those progressive, strategic changes being made--not longing for the good old days--that create new options for the coop's benefit.
Our investments in plant, services, staff and training are critical--you and I seem to be on the same page with this. I must ask, though, are you receiving $2.5 million in improved service every year going back to 1996? I know very few who believe that is the case -- our service is excellent -- as it is with many neighboring cooperatives. We simply need to maximize our limited resources better, taking a page from some of those same neighboring cooperatives. This level and pace of increasing debt is unnecessary and unwarranted, and is not a "like-for-like" exchange for improving or worsening service on a day-to-day basis.
Our LREC members (including myself) enjoy the benefits of a very tenured, dedicated and skilled staff. Any healthy organization can benefit and grow through a limited degree of turnover, though. Therefore, I look forward to the new perspectives and opportunities on our horizon with a new general manager coming in.
Thanks for your comments--it is good to have an opportunity to correct some of the assumptions that you shared. Let's keep in touch -- I don't believe our opinions are that far apart!
Kathy Josephson
PS -- I personally--as an LREC member--support Option 2 to return the full face value of capital credits to the family estates that built the cooperative -- we appreciate their contributions over a lifetime.
THANK YOU Pelican Press for the article clarifying what we are voting for!!
It's too bad that a independent source has to dig for this information. It's also too bad the LREC has remained neutral with what this vote is actually about. I guess those intimidating watchdogs don't want the co-op to explain things, because that would hurt their agenda. Any logical person, who looks at both sides of the issue, will keep things the way they are (opt. 1).
Dear May 31 Blogger,
The watchdogs are in the minority at the LREC, and are being chased as if there is a witchhunt in progress.
LREC's majority of directors (who still control every board vote) are still the LREC old school, NOT watchdogs. That is why you are not getting any information out of LREC. They don't want you to know what they have been doing with your money. I hope to see the majority swing this year so the members can get actual information released rather than propaganda about how well things are going.
The watchdogs are the people who are encouraging change for more communication and disclosure about business practices and financial information. LREC doesn't want to answer any of the hard questions.
Perhaps you don't know what any logical person would do, as you stated, since you didn't know that the controlling group is not the Watchdogs and you have not done your own research. Your favorite option 1 prevents people from getting 30% of their own money back: NOT JUST THEIR INTEREST, as LREC would have you believe. ALL capital credits come back to you after 25 years at exactly the dollar amount you contributed. There is never interest. LREC has free use of customers' money as long as they hold onto your capital credits. When they don't return full value to estates they are not just discounting interest. They are CONFISCATING 30%+ of their deceased customers' value. Option 2 is the only fair answer, as dollars lent to LREC must be returned to the members' estates.
Do not blindly trust and blame without finding out the facts. Do a Google search to do some independent research. This is not a difficult topic to learn about. Please inform yourself to see why OPTION 2 IS THE RESPONSIBLE, FAIR WAY TO GO.
i for one have trust in my board's decision. i still will vote for #1.
Capital credits, schmapital credits...what does it really matter what option is voted for? With a cooperative loosing $2.5MM annually, ANY annual payment to members for capital credits simply increases the magnitude of financial underperformance. Some people don't understand why they shouldn't "get the money they have coming to them...???? : the only way you get "money comeing to you" is if your cooperative turns a profit at the end of the year! Where in the world does any money-loosing enterprise pay out a dividend???
LREC is a business. At the current rate of loss and underperformance, it will be only a matter of time before we loose our local independence and get gobbled up by another more financially healthy cooperateive. One way or the other, we as LREC members will have to take our medicine. We will either have to 1) live with increased rates to pay for the current level of staffing and infrastructure and pay down our current debt, 2) reduce the current level of staffing, instructure and pay down dept to match LREC's revenue stream based on current rates or 3) fall further into financial insolvency, the outcome of which, we will all deserve what we get.
I am SOOO tired of the b as in "B", s as in "S" BS that is being shoveled. Someone else pay for this, someone else pay for that. This is our cooperative and as members, it is up to each of us to understand this issues that affect our cooperative. The ENTIRE leadership of LREC needs to get back to the basics of running the business of delivering electricity to the memebership. Your customer base is largely captive (what a luxury in today's competivitve business environment) and have very good predictability of annual revenue. The fact that our cooperative has not been able to build a budget that matches annual expenses to annual anticipated revenues is irresponsible.
It is up to the membership to let the leadership know they have our support to make the right decisions, even if they might sting a bit. It is up to our leadership to stand tall, each and every one, be personally accountable for the current unhealthy state of our cooperative and be willing to make the tough decisions that inevitably land at the feet of leaders. Being elected to the LREC Board of Directors is not a popularity contest. It is a vote of confidence. Confidence that as a Director your decisions will support and lead to a cooperative that is financially healthy and provides good service. Anything less is a dis-service to your constituents.
Either start running LREC as a profitable business enterprise or another local cooperative will be happy to show us how it is done.
Anonymous, are you talking layoffs? Don't forget that over 50% of the LREC budget goes to pay for JUST ELECTRICITY! I would say we are doing pretty darn good for the remaining budget by paying wages (good chunk of any budget to any business)and maintaining infrastructure, and paying debt. Where do cut? Cut employees? Cut wages (moral)? Quit investing in infrastructure? I don't think we want to wait days upon days to have our electricity restored! Customer service is EVERYTHING to EVERY business. If you don't think that cutting in these areas won't do this, you are very wrong. The days of running an electrical service have changed, and your ideas seem to show your ignorance, and lack of business knowledge.
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