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Show EDITORIAL More Questions Raised Recent events at Garkane Power Association's board meetings have raised many questions in the minds of the electrical cooperative's consumers, particularly those who are eagerly awaiting progress on the board's commitment to move the company's headquarters to Hatch. The report on the independent study commissioned by the board which was released just this week raises many more questions. We asked new Garkane board member Hugh Wilson if the Sept. 17 actions of the board stemming from the independent study report meant that Garkane would no longer follow the Richfield office closure plan previously proposed by general manager Carl Albrecht and adopted by the board. Wilson replied, "Certainly not. The independent study pointed out two primary reasons that a loan to construct a building would not be approved by the Public Service Commission (PSC) or by Garkane's lending institution CFC. Those two reasons are first, Garkane's operating margins are below what would be considered an acceptable level for the loan, and second, Garkane's rate structure is not as competitive as it has been historically, due to a significant reduction in Pacific Power ' (formerly UP&L) rates proposed by Scottish Power in order to achieve PSC approval of their merger." Wilson said that he has asked for the board to consider at its next meeting a proposal to add onto the current structures instead of constructing new buildings to accomplish the adopted plan for the Richfield closure. When asked why the loan was necessary in the first place, Wilson replied that at the time Albrecht' s closure plan was adopted, there were adequate funds in reserves to construct the buildings without a loan, but that is no longer the case. When questioned as to why that is no longer the case, he said he was hesitant to discuss those reasons in detail because of criticism he had received from the board for his past efforts to keep the consumers informed. (The Garfield County News has already been told by a Richfield colleague that Wilson has . been threatened with a lawsuit by the EscalanteBoulder representative on the board.) Wilson said that the reasons were (See EDITORIAL On Page 6A) EDITORIAL - More Questions From Page 2 detailed in the independent study report provided to the Garfield County News by the board, and he indicated a willingness to answer any questions about the study. We asked him why the loan amount of $1 million to construct a building was placed into Garkane's funding request to CFC. He replied that such action was not one taken by the board, but that it was obviously a result of reserves having been depleted. Our review of the independent study report reveals several interesting actions taken by the board that have reduced Garkane's operating margins. First, over $600,000 of Garkane's reserves has been spent starting up the Garkane Propane division. We give Garkane great credit for its successful efforts to provide propane to its customers at a more reasonable rate than has been available historically. At the same time, we wonder why this obviously successful division has not yet been funded with its own loan. Second, some time in the past, the board apparently made a conscious decision to lower the margins and put money back into the consumers' hands. Refunds of patronage capital to consumers have been issued for the past three years. Third, the board also adopted a construction work plan last year that requires Garkane to borrow $3.6 million from its lending institution. The independent study report's analysis indicates that the work plan loan would add in excess of $500,000 to Garkane's annual expenditures and the $1 million building loan would add another $48,000 to the annual expenditures. Which is where the questions come in. Is there a message here? Are there more reasons than just the obvious that Garkane's margins are now "not acceptable" to their lending institution? Why did the lending institution question the building loan application but not the construction work plan application? How did Citation Oil, the company that challenged the building loan application, even become aware of it? We at the Garfield County News have never claimed to be accountants, but something does not add up here. Why has Garkane's general manager allowed the reserves to dwindle to nothing while knowing that he had committed the company to a Richfield office closure plan under which he said could construct out of those reserve funds the new buildings that would be needed? Why should constructing the offices needed to close the Richfield office cost $1 million? Where did that figure come from and who put it in the funding request? We encourage Albrecht and the board to take appropriate action to effect the closure in the least costly manner and without any longer dragging their feet. |