March 5, 2017 at 3:10 pm #421
VEA was created 50 years ago by the hard working residents in Pahrump, Amargosa and Fish Lake Valley. Each had a small co-op, but independently they were too small to stand on their own. They merged into what became VEA. The original business model was simple, to be a lean, member owned utility whose sole mission was to provide reliable power at the lowest possible cost across a wide area of rural Nevada. For many years VEA operated under this simple, effective and cost efficient policy. Members received reliable power and our rates were very reasonable.
However, since CEO Husted was hired in 2006, VEA has become a bloated monster that now serves the overblown ego of Mr. Husted and the board. New buildings, a million dollar-office in Las Vegas, spending millions on unnecessary local and state-wide advertising and high paid lobbyists, tens of millions for broadband operations, a huge management staff, each making $100,000 – 500,000 in annual compensation, etc. Nothing is too good or costs too much to feed Mr. Husted’s ego. During these 11 years Mr. Husted has buried members nearly $300 million in debt, while our board has annually increased his compensation from $182,000 to around $600,000 per year. To put that is perspective, the average CEO compensation for the 900+ REA’s across America is $150 – 250,000. Now I have heard that the board, who now represents the CEO, not the members, is offering the CEO a LARGE bonus if he will continue in his position for four more years. MAKE NO MISTAKE, THE CURRENT BOARD DOES NOT REPRESENT THE MEMBERS, they are simply yes-men hand puppets for our gold plated CEO.
Mr. Husted brags that he has gone years without a rate increase, until the “necessary” 9.9% rate increase last year. Note that in the 2014 Annual Report the CEO bragged that a rate increase would not be necessary through 2018. The largest cost of VEA doing business is the cost of power. What Mr. Husted does not reveal is that the wholesale cost of power, what VEA pays for power, has been stable and even declining for years. VEA has power purchase contracts through 2028 for reasonably priced power. So why the need to raise rates? Simple answer, THE COST OF PAYING ON THE DEBT, not much different than your credit card bills, the more you run up your credit card balance, the higher your monthly bill. Since Mr. Husted is obsessed with spending, the debt-to-equity ratio which determines VEA credit worthiness has gone in the toilet. SERVICING THE DEBT AND EXCESSIVE SPENDING ARE THE ONLY THINGS FORCING RATE INCREASES! If VEA were to pay off the debt, our power rates would drop, significantly!
With lines of credit drying up, our CEO and board instigated a 9.9% rate increase to help cover their financial behinds. However, the deception goes deeper! The rate increase was a red herring thrown out while Mr. Husted was quietly soliciting buyers for our 230kv transmission system. Our single largest asset. Then when the sale was announced, our CEO bragged about how it would reduce our rates 9.9%. In other words, we got nothing we didn’t have before the artificial rate increase was put in place! As another insult to members, the transmission line is apparently being sold at a “fire sale” price. People in the transmission business have informed me that the line is worth up to $300 million, so Mr. Husted, in a panic to get cash, left about $100 million of member money on the table. If all of the proceeds were to go to pay off debt and capital credits, this would be a somewhat reasonable deal. However, our CEO and board want to keep at least $40 million in some kind of undefined “rainy day fund”. In reality it is a $40 million slush fund for Mr. Husted’s pet projects, himself and the board.
Much more to the sad story of our CEO and board (who I consider nothing more than Stepford Wife bobble heads for Mr. Husted), who have no respect for members, which I will discuss further in future posts.
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