SMPA Governance Reform Project

Stop the politics of

  • requiring patron-member electric customers to invest equity patronage capital annually

  • delaying annual refund payments to avoid rate increases which promotes incumbent directors reelection

  • promoting money-losing net metering

  • allowing net-meter patron-members which provide no equity to vote in cooperative director elections

Monopoly electric utility San Miguel Power Association (SMPA) in past decades abused its authority to collect revenues from its patron-members (captive customers) by withholding annual refunds.

SMPA Bylaws grant the elected Board of Directors authority to decide when to pay-out refunds. SMPA skipped annual refunds for 10 consecutive years in the 21st century.

Skipping annual refunds or reducing the annual refund pay-out amount avoids monthly electric bill rate increases. Instead of raising rates for electric service, SMPA directorts extended the number of years members must wait for their refunds. In other words, directors chose to borrow money from members.

Past decisions to skip annual refund pay-outs were political. Avoiding rate increases improves incumbent directors reelection prospects, and indirectly, job retention for the SMPA general manager/chief executive officer.

SMPA plans to increase the number of years SMPA members must wait for annual refunds from 28 years to 29 years at year-end 2024.

If a members discontinues purchasing electric service from SMPA, the former member does not receive an immediate payment of all previous unpaid annual refunds. Former member must wait the same number of years as active members. During this refund delay, former member’s money held by SMPA does not earn interest or pay dividends, and loses purchasing value due to the rising cost of goods and services, also known as “inflation” and “Consumer Price Index.”

goal

Eliminate patronage capital credit policies which require members to invest annually in San Miguel Power Association (SMPA).

These investments earn no interest for members and pay no dividends.

PROPOSALS

  1. eliminate member patronage capital annual contribution requirement for future years, OR;

  2. continue member patronage capital annual contribution requirement, but distribute (refund) member allocated patronage capital no later June 30 of the following year.

  3. refund 100% of retained patronage capital to inactive members.

  4. refund all previous years allocated patronage capital to active members, discounted by year according to loss or purchasing value.

The Seven Cooperative Principles include:

1. Open and Voluntary Membership
3. Members’ Economic Participation

3. Economic Participation means cooperative members must invest in their cooperative by providing “capital.” This annual investment is defined in SMPA Bylaws as each member’s share of SMPA’s annual “margin” (profit). It is a ratio of member purchases (patronage) compared to total annual SMPA revenue,

The amount of each member share of an annual margin is “allocated patronage capital” in co-op lingo

Bylaws allow SMPA Board of Directors to retain member’s shares of SMPA annual “margin” (profit) for as long as the Board of Directors desires. The allocated patronage capital is held in an account for each member until SMPA BOD authorizes “distributions” (pay-outs or refunds) by check delivered by Post Office.

Member allocated patronage capital accounts do not earn interest and do not pay dividends. This is prohibited by United States Internal Revenue Code regulations regarding income-tax-exempt not-for profit cooperatives.

Membership in SMPA is not voluntary, it is a requirement of accepting electric service. Therefore, Members Economic Participation is also a requirement of membership.

Does seven cooperative principles are based the Rochdale Society of Equitable Pioneers and the Rochdale Principles. Founded in Great Britain in 1844 by tradesmen who’s skills had been replaced by industrial mechanization, the Rochdale cooperative opened a store to sell food items which members could not afford to purchase elsewhere.

Rochdale Society of Equitable Pioneers - Wikipedia

Our History | The Rochdale Pioneers

Historical citations do not suggest that the Rochdale Cooperative was a retail grocery monopoly in Rochdale, nor that membership and economic participation of all Roachdale residents was required. Monopoly electric cooperative utilities in the United States, such as San Miguel Power Association, nevertheless use the economic participation of the Rochdale Cooperative as an excuse to require customers to invest in the cooperative.

Board of Directors

  • reduce number of directors from five to seven

  • limit president of board of directors one-year terms to no more than three consecutive and six lifetime -OR- president elected by all all consumers system-wide and term of office same as other directors

  • arrange director district boundaries to limit Telluride - Mountain Village - Placerville area to no more than two director positions

  • provide election bonus votes to candidates with significant (TBD) prior cooperative or municipal electric utility experience

  • limit board of directors expenses and associated expenses to not more than 0.25 percent of total annual operating expenses

Reorganize

  1. create regional self-governing Community Choice Energy (CCE) units

  2. designate San Miguel Power Assocation to:

    • own, operate, maintain and construct electric distribution system

    • perform billing and metering services for the regional CCEs

  3. OR - convert entire electric utility service area to one Public Utility District, Power Authority or LLC