ElectriCities Board Rallies to Tilton's Defense - WHY?

Finally a reporter who can report!

http://www.rockymounttelegram.com/local/content/news/stories/2008/07/13/electricities.html

But still, not the whole story.

However, see how Sam Noble and Fred Turnage defend their man. Why is that?
What co-ops have salaries like Tilton's? None I have found. Lets see some facts Mr. Noble. What other entities have increases like this from bad refinancing Mr. Turnage? We keep hearing it but where are those entities and what are the ramifications.

And what about the double digit salary increases staff got to drive up Tilton's salary increase? How much were those and who got them? Tilton gave many of them and the documents have been floating around for a while now. He pumped one guy up at least 60% over 5 years - Clay Norris.

And what about a list of settlements Tilton told the commissioners about - how much was that?

Still no answer to the discrepancies between what ElectriCities says and what they write.

Without BlueNC, the forum for this all would have been a low murmur of folks concerned. The advice from James and Dan has been invaluable. We battle on.

Comments

Is there any role for a public records request?

I'm not up to speed on the technical details here, but I wonder if there are any communications between ElectriCities and the government ... and if so, might they shed some light on the whole business?

The article refers to bloggers

Next time you'll want it to say "Citizens for Leadership Excellence And Responsibility at Electricities"

CLEAR Electricities

$450K a year

I guess maybe they should be paying more to get someone who's really capable of doing the job.

I'd fire anyone who came to me and say, "I've mismanaged things so poorly that we now need a 14% price increase."

Citizens for Leadership Excellence Responsibility-ElectriCities

I agree with this name. We have two new reporters working on the story now. They will be requesting some records. Even though some citizens want to go look we figure we will be drowning in junk there so better for the newspapers to do it. Next up, staff salaries and the timing so we can see if Tilton was jacking their salary up so he could get his jacked up. The top management makes a couple million dollars.

Have any legislators turned in their PAC money? Seems like that would be a no brainer because of the stigma of taking money from this place now.

We need the communications with the rating agencies too.

Anyone on here able to cite hospitals or airports who did this refinancing that is as screwed up as this one? Seems everyone is hiding behind the excuse "everyone did it" so we are not alone. Pretty flaky argument to tell people in cities. I will gladly save 2% on the 14% if that is the REAL number, with someone who knows how to refinance properly and keeps the public informed. What is the issue here - these people act as if this is not the business of the people.

Don't let them run

Keep asking the follow-up questions.

First, don't let them get away with the "hindsight is 20/20" defense. It always assumes that you don't remember your history. From the Rocky Mount Telegram article:

Kenneth M. Raber, senior vice president of ElectriCities Services/North Carolina Eastern Municipal Power Agency, said hindsight is always 20-20. But given the facts in 2004, it made a lot of sense for the power agency to convert some of the fixed-rate bonds. Fixed-rate bonds in 2004 had interest rates of 5.6 percent, compared to 3 percent of the variable ones, he said.

"Who could have predicted the sub-prime (mortgage) crisis?" Raber said. "If the same set of circumstances (in 2004) presented itself today, we'd probably make the same decision.

From the NCEMPA's own annual reports:

By using derivative instruments, the Agency exposes itself to credit risk and market risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract...

Market risk is the adverse effect on the value of financial instruments that results from a change in interest rates. The market risk associated with interest-rate contracts is managed by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken.

Or,

Fred Turnage, the former mayor of Rocky Mount who also is an ElectriCities board member, said it would be unfair to single Tilton out for the decision to go to the variable-rate bonds.

"It is pretty standard practice to have variable-rate debt as part of a prudent financial strategy," he said.

He also said a number of North Carolina entities – from airport authorities to health care organizations to publicly traded companies – had decided to invest at least some of their portfolios in variable rate bonds, whose rates can fluctuate depending on market conditions.

Don't fall for the "prudent financial strategy" line without asking the logical follow-ups (as you've started to do):

  • Which North Carolina entities?
  • Which parts of their portfolios did they invest in variable rate bonds? Short-term assets? Their long-term obligations?
  • Were they swapping fixed debt (at 5-6%) for variable debt?
  • How did they manage their exposure to variable interest rates?

In short, interest rates were falling. ElectriCities didn't lock in historically low rates by issuing new fixed rate bonds. Instead, management traded a higher fixed rate for the risk of a lower, but floating rate on bonds related to long-term assets (like, um, power plants). They knew there was a risk; they even disclosed the risk in the annual reports. Now would be a good time to ask about how that risk was managed and monitored (instead of giving them a pass because "everyone else did it too" or even worse, "the bankers told us to do it").

And finally:

Rocky Mount City Manager Steve Raper, who also is chairman of the the power agency's rate committee that recommended the increase, said Rocky Mount can't get out of the deal.

"We are locked in contractually (with the power agency) through 2024," he said.

Keep in mind that the General Assembly only gave the Agency the ability to enter into long-term contracts a month ago. Was Rocky Mount asking the probing questions about the rate hike? Did ElectriCities lay out a compelling 16 year plan?

... which should bring you back to the same question: Who is watching ElectriCities? In the end, it is the only question that really matters. Don't paint a picture about rising fuel costs or even rising interest rates. You can't stop the fuel costs and you can't stop the rates. But you can demand accountability for mismanagement.

Paint a picture about a management team that is making mistakes that are costing taxpayers and consumers. Paint a picture about a Board of Directors that seems to be rubberstamping bad decisions. Paint a picture of a Board of Commissioners made up of mayors who may or may not know as much as you and I know about the power industry, corporate finance, or any of the other areas of expertise that may come in handy when serving on the board of a utility company.

If the Executive Management team isn't making good decisions and the Board of Directors isn't making good decisions, who is making the good decisions for the cities and towns that are members (and by extension, the taxpayers and consumers that are paying for the mismanagement)? What's the point of having a Board of Directors or a Board of Commissions if those boards aren't going to do their jobs?

Ask the questions and find the answers.

If this were a real business

legal action by shareholders against management and the board would be entirely in order. I guess that means ElectriCities isn't a real business? Sure isn't being run like one.

Excellent Analysis of ElectriCities again dan

http://www.talkingaboutpolitics.com/CommentDiscussionForum/tabid/59/ptid/412/page/17/totrecs/254/thr...

This post certainly connects some other dots about people leaving. The government relations group is turning over faster than anyone can keep track. Another area of severe mismanagement. Another buck stopping at the plate of Tilton.

Quoting the poster re Government Relations professionals leaving, "Alice Garland 2003; Jeannie Bonds 2007 - Tilton admits payoffs to them. Both very sharp and strategic."

"Teresa McFadden ...leaves; Dan Crawford leaves suddenly; Ken Melton leaves suddenly after a very short time like what two months ...but Melton gets a contract gig from Tilton ...."

"Karen Johnson hired and fired in 4 months."

"And the best part is, the rest of staff is told to sit back and ignore these posts cause they can't be true even though we quote from the emails we get. Yeah/Right/Sure. Senior Management does not even lie well anymore."

Al Manning, retiree, native of eastern NC and proud of it, plenty of time to read, research and get annoyed about the lack of accountability in elected leaders these days. Married to a real southern lady and we live with two labs and two airedales who run

ElectriCities

I agree with James' comment.
"I guess maybe they should be paying more to get someone who's really capable of doing the job.

I'd fire anyone who came to me and say, "I've mismanaged things so poorly that we now need a 14% price increase."

In fact, we need a financial expert who is able to listen and analyze investment banker advice not just dine with them and if we need to pay them more, so be it. An electrical engineer is not the person for this mess. With all the excess spending in senior management, we can cut them and hire better.

We have a game plan and it starts tonight. Again, Dan and James - the analysis and communications insight and advice has been invaluable. We owe you.

Al Manning, retiree, native of eastern NC and proud of it, plenty of time to read, research and get annoyed about the lack of accountability in elected leaders these days. Married to a real southern lady and we live with two labs and two airedales who run