Grayson Rural Electric Cooperative — which has customers in our coverage area — recently received permission from the Kentucky Public Service Commission to raise rates.
As part of the ruling from the Public Service Commission the PSC also made a surprising allegation that the electric cooperative has not implemented cost cutting measures as was ordered previously by the PSC. And, the PSC ordered an audit of the cooperative.
We published the original story about the rates being raised online and in print in both this newspaper and our sister papers throughout the region. The cooperative (RECC) responded, disputing some of the allegations and affirming to its customers that it has taken many cost cutting steps over the years. The RECC said it is committed to customer service, efficient use of customer dollars and finding solutions to the financial challenges detailed by the PSC.
In a nutshell, the PSC said a new monthly residential customer charge at $21.25 and increased the per-kWH charge by less than one-tenth of a cent from the present level. The net result is an average increase for residential customers of about 6.09 percent. Surprisingly the PSC also accused the RECC of “gross mismanagement” and questioned why the RECC agreed to pay full lifetime costs of health insurance for the utility’s former outside attorney and his wife.
The utility, the PSC claimed, has also agreed to pay the health insurance costs of an attorney for the union that represents some of Grayson RECC’s employees (a fact the cooperative said is simply not correct); and agreed to pay 100 percent of health insurance premiums for Grayson RECC employees and their families rather than requiring an employee contribution that is in line with prevailing industry standards; and, according to the PSC, continued to “grant generous salary increases and benefits even as the utility’s financial condition deteriorated, while also ignoring (an) earlier PSC directive to bring expenses under control.”
The RECC said the agreement to pay lifetime insurance for a former outside attorney and their wife was a decision made decades ago and predates current management. They are exploring the possibility of trying to get out of the deal. Again, they said the cooperative has engaged in cost cutting.
“We look forward to an independent audit of our management practices so that all parties concerned can gain a better understanding of the cost-conscious and strategic decisions by Grayson RECC to effectively serve our membership,” the cooperative said. “The service territory of Grayson RECC includes particularly challenging terrain and many economically disadvantaged members.”
A wage and salary plan conducted by an outside specialist found that Grayson RECC wages were on level both with comparative co-ops and with skilled trades salaries in the market served by Grayson RECC, but they did confirm the increases have taken place.
Here’s our guess of what’s happening, and it is just a guess, but we think it is an educated one based on our experiences in the private sector in rural America. What’s going on is times have changed. Businesses and service providers, whether they are in the private or non profit sectors, face exploding health care costs like never before. The cost of doing business in rural America has also changed. Everything is harder than it used to be whether it be the costs of delivering products across large regions or controlling costs. Add in the fact that you are not in a major metro area -- an area that has seen significant population declines and job losses, and you have major challenges just to break even. Rural America isn’t thriving like it once was.
Our take on this is the audit order is a good thing for all involved. Let an independent auditor take a look and come back with a neutral report that can be acted upon for the best interests of the customer. If painful changes are necessary, so be it. There can’t be any more rate increases on the horizon. The audit should, in the long-haul, be in the best interests of the customer, which is what is needed.