KIUC explains travel costs — vaguely

Editor’s note: This is the first of two stories about Kaua’i Island Utility Cooperative’s board travel expenses and other spending patterns

How much is Kauai Island Utility Cooperative’s (KIUC) board directors’ travel costing coop membership, where are they going, and to whom are they accountable?

Answers to some of these questions are clear, and some aren’t.

KIUC officials said at least $90,000 has been spent on travel so far this year, but that is likely a partial reckoning.

KIUC directors do not have a hard-and-fast travel budget, but have exceeded it by $26,000 this year, according to KIUC President and Chief Executive Officer H.A. “Dutch” Achenbach.

“I do not have the specific number of trips, but can tell you that, year-to-date, including airplane travel, hotel and meals, the board of directors has spent approximately $76,000 on travel,” Achenbach said.

KIUC Communications Director Anne Barnes said those in the Member-Services Department were budgeted $47,000 for travel to conferences, and have spent about $14,000 of that so far this year.

KIUC leaders say the board travel is necessary for continuing education and training, but did not supply itemized lists of directors’ travel expenses as requested by The Garden Island by deadline.

Achenbach said KIUC leaders are willing to research these matters, including two trips to Alaska made by KIUC board Chairman Gregg Gardiner, but would be unable to provide it in time for today’s publication.

Achenbach said this type of information is not normally made public.

KIUC members pay the highest electricity rates in the state based upon their high dependency on oil to generate electricity, according to an Aug. 29 report in The Garden Island.

Many members have been calling for lower rates since ownership of the utility transferred from a for-profit corporation to a nonprofit cooperative a few years ago.

Achenbach said the total travel “budget” for all nine directors in 2005 is $50,000. He said directors do not present a list of planned travel to members.

“Travel varies by director. Each year, three directors are seated. This year, two new directors joined KIUC,” Achenbach said.

“Our by-laws and policies require that each new director secure their Certified Cooperative Director (CCD) certificate,” Achenbach said.

KIUC leaders declined to provide an exact accounting of travel expenses. They declined e-mail requests to provide a comprehensive list of trips taken by each director, including board chair Gardiner and Achenbach.

“This has involved a number of trips by directors for training to the NRECA Annual Convention, the National Rural Electric Cooperative Association (NRECA) Directors’ Conference, the CFC (Cooperative Finance Corporation) Financial Forum, and the NRECA Legislative Forum,” said Achenbach.

“The training classes are mandated by the bylaws, and are to insure that the directors have the knowledge to govern the cooperative in a responsible manner,” he added.

Achenbach said all trips are approved by members of the KIUC board, either specifically or by policy, and at KIUC board meetings that are open to the public.

He said the board treasurer signs off on all expense reports for board members except himself. Gardiner signs off on treasurer requests, and KIUC officials (as a whole) are audited by an independent firm of licensed CPAs (certified public accountants) using recognized accounting rules and principles. The accounting firm is approved by leaders in the U.S. Department of Agriculture Rural Utilities Service (RUS).

“Our Accounting Department keeps accurate records of all company travel, including individual receipts. The same rules for this accounting apply to directors as they do to staff,” Achenbach said.

“Accounting records are not specifically open to the public, but KIUC has always been forthright in answering questions or concerns.”

Gardiner said a trip he took to Alaska last month was for the purpose of attending an Alaska Power Association meeting on behalf of KIUC. He also attended a conference in Kodiak, Alaska.

“My expenses were paid for by KIUC under the Board Policy No. 8 governing Director Compensation and Expense reimbursement,” Gardner said.

“Under that policy, I was also entitled to daily stipends for the time spent, but decided not to ask for reimbursement of out-of-pocket expenses, or claim any stipends,” he said.

Gardiner said the bulk of his travel expenses are paid by the NRECA.

“The only board meetings that I attend on the East Coast are for the board of the National Rural Electric Cooperative Association (NRECA), of which I am an elected director,” Gardiner continued.

“My responsibilities as a NRECA director include four board trips a year. Those trips are paid for by the NRECA.”

Gardiner said board members have been taking an extensive look at battery energy storage as a possible source of renewable energy.

Gardiner said this technology (BESS, or battery energy storage system), could improve the quality of KIUC’s electrical system, as well as reduce costs for the membership, even though the cost of such systems may run in the millions of dollars.

“The board authorized me as chairman to travel with Achenbach to Fairbanks to look at their battery energy storage system (BESS). The expenses for this trip (including a stop in Toronto, Canada, to attend a symposium on such batteries) were paid by KIUC.”

Gardiner said most states where there are electric cooperatives have statewide associations where leaders of the cooperatives in that state get together to discuss issues that are important to them, and which they have in common.

“In the case of KIUC, we are the only electric cooperative in the state. As a result, we have no statewide association to be able to help us network with other electric cooperatives with similar problems,” Gardiner said.

“It made a lot of sense for KIUC to send a director to determine if joining this association was in our best interest. I went and participated in a three-and-a-half-day conference in Kodiak,” Gardiner said.

“Unlike most cooperatives, KIUC does not just distribute power. It also generates its power, and distributes it to the distribution network,” Achenbach said.

“In our business, comprehensive understanding and training are extremely important and, in large part, because of our remote location, don’t come free,” Achenbach added.

Achenbach said KIUC directors must govern a $140-million-a-year company, with almost 30,000 members, with all the complexities that go with it, along with gaining a comprehensive understanding of everything that is involved in generating, transmitting and distributing electric power into members’ homes.

He said that, before travel takes place, “it must be deemed as beneficial to the membership.”


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