Dozens of utility, municipal officials attended $342,000 Kentucky Derby 'retreat'

A lavish, most-expenses-paid trip to the Kentucky Derby hosted by the Connecticut Municipal Electric Energy Cooperative, billed as “strategic retreats” for dozens of board members, municipal officials and guests affiliated with the six-member cooperative, is raising ethics questions in some circles and has prompted an investigation by Groton City Mayor Marian Galbraith.

Those attending the four-day retreat in May that cost CMEEC a total of $342,330 included: Norwich Mayor Deberey Hinchey, Norwich Public Utilities General Manager John Bilda, NPU Division Manager Steve Sinko, Norwich Board of Public Utilities Commissioners Chairwoman Diane Boisclair and Vice Chairman Robert Groner, Groton Utilities Director Ron Gaudet, Groton Utilities Commission member Ed DeMuzzio and Groton Utilities General Manager of Utility Finance David Collard, former Groton Mayor Dennis Popp, Jewett City Utilities Commissioner Richard Throwe and Amy Demicco, wife of a Jewett City Utilities commissioner.

Gaudet and his wife, Paula Gaudet, traveled separately from the group and stayed only through Friday's activities, he said, because of his busy schedule at the time. CMEEC still paid for their transportation.

Several CMEEC staff, led by Executive Director Drew Rankin, also attended.

CMEEC is a wholesale energy purchasing cooperative owned by six municipally owned public utilities: Norwich, Groton, Jewett City, South and East Norwalk and the city of Norwalk. Bozrah Light & Power, also owned by Groton Utilities, and the Mohegan Tribal Utility Authority are listed as “participating utilities.”

Bilda, who also serves as CMEEC Board of Directors vice chairman, said the cooperative paid all expenses for attendees, except personal spending money for gambling and souvenirs for the May 5-8 trip.

The trip “did not cost the ratepayers or taxpayers a dime,” Bilda said.

Rankin said the Kentucky Derby trip each year was funded through “nonmember” funds generated by CMEEC not related to utility members or ratepayers. Bilda described those sources as power supply contracts with entities outside Connecticut and successful strategic investments of CMEEC's assets.

Galbraith, who chairs the Groton Utilities Commission as Groton City mayor, said she was totally unaware of the trips over the years and never was invited. However, her predecessor, Popp, attended this year's trip.

"I'm investigating it," Galbraith said. "I do have concerns about it. This has been happening for four years and was never reported to our utilities commission. If I had known, I would have advised them not to go."

Galbraith said she has chaired the Groton Utilities Commission since she was elected in 2011. She doesn't know why she was never invited, and recalled only once hearing that CMEEC had a retreat.

"I never envisioned it would be this," she said. "There was never a mention of where it happened. My idea of a retreat is the Board of Education going to (a Mystic hotel) for a couple of days for strategic planning."

A retreat without meetings

“Are you ready for some genuine Kentucky Experience and Derby fun?” said a letter to members and guests titled "CMEEC 2016 Strategic Retreat."

“This weekend of celebration and strategic time together, learning more about each other through unique shared experiences, creates a unity of purpose and alignment that further enriches CMEEC's strategic capabilities,” the letter stated lower, giving Rankin's contact information at the bottom.

Most participants flew with the group out of Groton-New London Airport on May 5, stayed at the exclusive Galt House Hotel in Louisville, attended an awards dinner in the REVUE, the hotel's revolving restaurant, Thursday night, pre-derby events Friday at Churchill Downs and on Saturday attended the Kentucky Derby, with tickets provided by CMEEC.

According to the itinerary and interviews with several attendees, the awards dinner was the only formal gathering, and no business workshops, conferences or presentations were held. Attendees were encouraged to mingle with one another throughout the trip, and some went on tours and sightseeing visits and pre-derby events together, participants said.

CMEEC has hosted trips to the Kentucky Derby each year since 2013, with costs and guest lists increasing each year. In 2015, the trip cost $316,702 for 27 participants, including Bilda, Sinko, Gaudet, various CMEEC officials, Yantic Volunteer Fire Chief and Norwich business owner Frank Blanchard, then-Norwich utilities commission Chairman James Sullivan, Louis Demicco and Throwe of Jewett City Utilities.

CMEEC did not provide guest lists for the 2014 and 2013 trips in a Freedom of Information request by The Day for information, itineraries and budgets for the trips. The 2014 trip cost $216,292 and the 2013 trip, $145,776.

CMEEC officials and attendees defended the trip in interviews, calling it a valuable networking experience that helped solidify relationships and trust among board members, similar to off-site retreats hosted by businesses and other organizations.

“Three things,” CMEEC board Chairman Kenneth Sullivan, the Jewett City Utility director, said. “It's all about strategic planning, strategic alliances, and board building and networking.”

Sullivan, who attended the 2015 trip, described the trip as a “nonwork” environment in which participants engaged in business-related discussions with colleagues on how they handle different things, strategic partnerships and different relations.

“Any board does this,” Sullivan said.

Rankin, CMEEC executive director, said the trip was launched in 2013 after two years of hard work on "a pretty dramatic set of structural changes within CMEEC." He said staff, board members and officials from member utilities embarked on member ownership, bylaws and financial structural changes to the organization founded in 1976 that improved its cash flow, financial health and brought better returns to the member utilities, to the tune of more than $100 million over the past four years.

The trip, he said, was planned "in recognition of the value of our member owners, to build trust, build relationships, create a much more efficient board of directors."

While reservations for the 2017 trip have been made, Rankin said it might be canceled if member municipal leaders object. He offered to meet with any municipal agency in the coming weeks to help explain the purpose of the trip and its benefits. Bilda said the Norwich Board of Public Utilities Commissioners will discuss the trip at its 6 p.m. meeting Tuesday at NPU headquarters, 16 S. Golden St. The meeting is open to the public.

CMEEC officials also defended the value of the trip, saying the cooperative provides its municipal utility owners with low-cost wholesale power at 10 to 20 percent below the rates that member customers would pay under so-called investor-owned private utilities, such as Eversource. CMEEC officials estimated that value at more than $100 million in “return” to member municipal utilities over the past four years.

“It's cost avoidance,” Sullivan said. “Money saved by having a muni and buying power through your muni.”

Rankin said he is not crediting the annual derby trips for the financial success of CMEEC, but said the business relationships the trip fosters have contributed to that success.

Bilda described CMEEC as a $300 million entity that grows to $500 million in southeastern Connecticut when the assets and revenues of just the three local separate member utilities — Norwich, Groton and Jewett City — are included in the total.

Bilda said no business grows to that level without fostering good relations among clients and customers.

“You have to have relationships where you know the other people and can trust them,” Bilda said.

Hinchey won't go again

But the trip and even the guest list has raised questions.

Norwich Mayor Hinchey said she received the invitation as a guest from CMEEC through Bilda. This was Hinchey's first year attending the derby trip. She likened it to the valuable networking she has engaged in through events at the U.S. Conference of Mayors and the Connecticut Conference of Municipalities. While all invitees were allowed an accompanying guest, Hinchey said she went alone.

Hinchey saw no conflict with the city's ethics code ordinance. The code prevents city employees, elected or appointed officials from receiving gifts valued at more than $50 “from any person who, to his or her knowledge, is interested directly or indirectly, in any manner whatsoever, in business dealings with the city or which gift may tend to influence him or her in the discharge of official duties or in granting any improper favor, service or thing of value.”

Hinchey said she is not financially involved with CMEEC, and the City Council is removed from technical power purchase agreements between NPU and CMEEC. Bilda said NPU owns about 23 percent of CMEEC.

Hinchey said she didn't know about the trip in past years and, because of the criticism it has generated, she would not attend if it is held again next year as planned.

“I don't vote on CMEEC things,” Hinchey said. “I don't benefit in any way. It seemed like a great opportunity, so I went. ... I considered it a personal trip. I'm very sorry it has caused this kind of distraction.”

Bilda said he and Groner attended the trip as CMEEC board members, and Sinko and Boisclair attended as alternate CMEEC board members. Bilda said it was a CMEEC function they should have attended. Bilda, who has gone on the derby trip each year since 2013, said he has asked NPU's attorney if the trip violated any ethics regulations and said it was cleared — “thoroughly vetted,” he said.

Rankin said Hinchey was invited as a last-minute addition because someone else could not go. Popp, the former Groton City mayor, was invited in recognition of his many years at the city's helm during CMEEC's formative years and growth.

Groton Utilities Director Ron Gaudet, who has held his position for 1½ years, said this was the first time he attended the Kentucky Derby trip and stayed only through Friday. Gaudet said he doesn't see any conflicts with the ethics chapter in the city charter, and found the portions he attended to be “very valuable” for networking and relationship building.

Gaudet said he felt obligated to attend at least part of the trip as a CMEEC board member. He is vice chairman of a board that oversees high-power transmission line issues for CMEEC.

But, he said this week, “I am very concerned on the optics part. I just do not want to be seen as having any questionable ethics. I expect a request (by someone) to the city to try to figure out whether there's an ethics issue.”

Groton City Mayor Galbraith said when the City Council has held goal-setting retreats, they've been at the Groton Inn & Suites, with follow-up reports.

“I think it's appropriate to step away from the ordinary business, set a block of time,” Galbraith said. “I don't have a problem with that being off site. You can really concentrate on the issues without interruptions. I think you ought to be able to report back. Bring goals back to the commission and vote on them. ... When I hear the word retreat, that's what I think of.”

The Groton charter's ethics code does not define a specific gift value, but states that no city official “shall accept any employment or have any substantial financial interest in, direct or indirect, or engage in business, transaction, or professional activity or incur any obligation of any nature which is in conflict with the proper discharge of their duties on behalf of the City or which will tend to impair such City Officials independence of judgment or action in the performance of their official duties.”

Sullivan, the CMEEC board chairman and Jewett City Utilities director, dismissed any ethical questions related to the trip. Sullivan said if a future trip is planned, he would go, but would put the needs of the local utility first in that decision.

“There are no ethics violations here at all,” Sullivan said. “It was a business trip. We should go if we are doing our jobs. We should be there. As far as any ethics violations, that's far-fetched.”

c.bessette@theday.com

Editor's Note: Jewett City Utilities Director Kenneth Sullivan did not attend the Kentucky Derby retreat in 2016.

Connecticut Municipal Electric Energy Cooperative has hosted a “Strategic Retreat” to the Kentucky Derby with dozens of invited guests from throughout the state each year since 2013.

Here are the trip breakdowns provided by CMEEC:

2016, May 5-8:

Cost: $342,330.

Itinerary highlights: Flight from Groton-New London Airport Thursday. Dinner at REVUE revolving restaurant “with stunning sunset views” at the Galt House Hotel in Louisville, Ky. After dinner, attendees on their own to explore street festivals “and other fun establishments.” Friday bus transportation to pre-derby events at Churchill Downs. No group functions that night.

Saturday: Tickets and transportation provided to the Kentucky Derby. Five tables assigned to the group. “Mixing and matching throughout the two days is fun and encouraged for maximum engagement!” the itinerary summary stated. No scheduled group activities that night.

Attendees:

CMEEC staff: Edward Pryor, Justin Connell, Mike Rall, Drew Rankin.

CMEEC board: Ed DeMuzzio, David Collard, Robert Groner, Dee Boisclair, John Bilda, Steve Sinko, Richard Throwe, Ron Gaudet (Friday only).

Guests: Amy Sarcia, Theresa Collard, Diane Groner, Richard Boisclair, Deb Bilda, Paula Sinko, Amy Demicco, Donna Colonni, Carol Throwe, Carolyn Pryor, Cara Stellato, Nicole Rall, John Nitti, Pat Nitti, Ashley Miles, Jill Miles, Paula Gaudet (Friday only), Jeff Celuch (Saturday only), Suzanne A. Hendricks-Celuch (Saturday only), Andrew Lee, Carol Lee, Dave Bonner, Steffanie Bonner, Dennis Popp, Karen Popp, Jacob Pagragan (Friday only), Emily Pagragan (Friday only), Will Hendrickson (Saturday only), Jackie Hendrickson (Saturday only), Timothy Shea, Britney O'Donnell, Deberey Hinchey.

2015, April 30-May 3

Cost: $316,702

Itinerary highlights: Flight from Groton-New London Airport, transportation to Galt House Hotel, Louisville. Group dinner in REVUE revolving restaurant. Open time after dinner to attend street festivals, other activities.

Friday: Travel provided to Churchill Downs for pre-derby activities. Four reserved tables for the group. No group activities that night.

Saturday: Travel and tickets provided to Churchill Downs to Kentucky Derby. Four reserved tables for group. No group activities that night.

Attendees:

CMEEC Staff: Drew Rankin, Edward Pryor, Justin Connell, Mike Rall.

CMEEC board: James Sullivan, John Bilda, Steve Sinko, Kenneth Sullivan, Louis Demicco, Richard Throwe, David Collard.

Guests: Brendan Sullivan, Deb Bilda, Paula Sinko, John Sullivan, Debra Sullivan, Frank Blanchard, Louise DiGangi, Janine M. Quilacio, Jessica L. Lyon, Nancy Sullivan, Amy Demicco, Carol Throwe, Theresa Collard, Carolyn Pryor, Cara Stellato and Nicole Rall.

2014, May 1-4

Cost: $216,292

Itinerary highlights: Thursday: Participants made own travel plans, paid by CMEEC. Transportation provided to Galt House Hotel, Louisville. Group dinner at REVUE revolving restaurant.

Friday: Transportation to Churchill Downs for pre-derby activities. Four tables with a total of 30 seats provided to the group. No planned group activities that night.

Saturday: Transportation and tickets to Kentucky Derby provided. Four tables reserved for the group. No planned group activities that night.

Attendees: List not provided.

2013

No details and no invitee list provided.

Cost: $145,776.

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