We understand this sentiment. The answer to this goes along with the answer to the previous question. The Board set aside $30 million from the transmission sale to offset power cost increases from 2017-28. If these funds had not been used to buy down the previous power contracts, a much higher rate increase would have been needed to pay for VEA’s power supply. In addition, the former CEO was also counting on new revenue to subsidize VEA’s rates and keep them stable when that promise was made. Those additional revenues have either not come online or have not produced the level of revenue that was expected. In addition, during the period of 2008 to 2018, the cost of providing electricity to our members has continued to increase, just as the cost of fuel, material, steel, and groceries. Therefore, we had to make difficult decisions.
We directed CEO Angela Evans to implement cost reductions across the cooperative, including a significant reduction to outside contractor expenses, reductions to the number of management and executive positions the co-op would maintain, freezing hiring (except for critical positions), freezing wages in 2018, offering a Voluntary Separation Incentive program and then involuntary reductions in employees. These reductions in cost were implemented since Ms. Evans was appointed as interim CEO with the goal of minimizing rate impacts on our members. We refused to present our members with a rate increase if we had not first looked exhaustively at our organization.
This Board takes its responsibility seriously, and is ultimately responsible for the financial health of the Cooperative, and the choices that have been made in the past, and that are being made now. Even with all the expense reductions, a rate increase is unavoidable. We also acknowledge the lack of transparency prior to Ms. Evan’s appointment as CEO that has contributed to the questions members may have today.