CMEEC close to naming new CEO
Utility cooperative also reveals budget for 2020
Norwich — A new era hasn’t totally arrived at the utility cooperative at the center of the Kentucky Derby scandal, but major changes were enacted and anticipated at Thursday’s Connecticut Municipal Electric Energy Cooperative annual board meeting.
The board voted unanimously to extend a contract offer to a new chief executive officer “subject to mutually acceptable employment agreement.” The person, not named, will replace former CEO Drew Rankin, who was fired in May after a board investigation into lavish spending on trips and local functions.
Board Chairman Kenneth Sullivan said prior to the meeting that the candidate will review and decide whether to accept the proposed terms. Interim CEO Michael Lane will continue as chief financial officer for CMEEC in 2020.
The board also approved a slate of officers, none of whom attended the controversial trips. Kevin Barber, general manager of the Third Taxing District of Norwalk, will become board chairman. Groton Utilities commissioner Jeffrey Godley was elected vice chairman, Groton municipal representative and former town manager Mark Oefinger as secretary and Norwich Public Utilities General Manager Christopher LaRose as treasurer.
Controversy erupted in 2016 over CMEEC’s hosting of lavish trips to the Kentucky Derby for four years and to a luxury golf resort in West Virginia for board members, top staff, family and guests. The Derby trips cost $1.2 million and led to federal indictments of five CMEEC officials a year ago.
Rankin, former NPU General Manager John Bilda, former CMEEC board and Norwich utilities board chairman James Sullivan, former CMEEC Chief Financial Officer Edward Pryor and former Groton CMEEC board member Edward DeMuzzio were charged with conspiracy and theft from a program receiving federal funds. Sullivan and Rankin face the same charges in a second indictment in connection with allegations that CMEEC paid for nearly $100,000 in Sullivan’s personal expenses.
Changes in state law now require CMEEC to hold all retreats in-state and authorized the six municipalities with CMEEC member utilities to name representatives to the board — Oefinger is Groton’s representative — and created a state ratepayer advocate position, now held by David Silverstone.
Following the indictments, a CMEEC board special committee conducted an independent investigation. The committee, led by Norwalk board member Debora Goldstein, made numerous management, governance and oversight recommendations, including Rankin’s dismissal.
Goldstein left the CMEEC board this month, and the board Thursday passed a resolution honoring her as a “transformational leader” who guided the nonprofit energy cooperative “through the complexities of change and helping to build an ever-stronger foundation for future success.”
Evidence of further change in CMEEC’s operation came with Thursday’s budget presentation. In contrast to past years, when CMEEC refused to release budget documents except for heavily redacted, mostly blacked-out pages, the budget released Thursday included summaries and some detailed expenses.
The cooperative’s 2020 nonfuel operating expense budget totals $14.6 million, down by $388,944 from the 2019 budgeted total, but up by $1 million from the expected actual 2019 total expenses.
Salaries total $3.98 million, up by $119,000 from final expected 2019 total. Board and governance expenses are budgeted at $326,200 — down by nearly half from the more than $600,000 per year prior to the Derby controversy. Board members receive stipends of $600 per meeting they attend, or $200 to participate by phone or electronically, and $250 for committee meetings in person, or $100 for committee meetings by phone.
The cooperative’s profits are funneled into the so-called Margin Fund, which is divided among the six member utilities to stabilize electric rates. Money from this fund was siphoned off to pay for the Kentucky Derby trips. Federal investigators allege that past CMEEC officials created a “contra-margin fund” to draw from for the trips.
The 2020 Margin Fund revenues are expected to total $3.76 million, including $422,180 paid into the fund by member utilities’ ratepayers. The budgeted total is down by $40,527 from the expected 2019 total.
Silverstone thanked the board Thursday for releasing the budget details and for cooperating with him as he participated in all the budget committee meetings. He said the budget process had “excruciating detail, in a good way.” He said the budget process was “exemplary” and urged CMEEC officials to keep a close eye on the budget throughout the year.
Oefinger agreed and suggested CMEEC could improve the budget summary by providing brief explanations of why certain budget items rose or dropped and what challenges the cooperative could expect in the coming year.