Head of regional energy cooperative defends Kentucky Derby trip

Norwich — The executive director of the Connecticut Municipal Electric Energy Cooperative on Monday vigorously defended so-called “strategic retreats” by staff, board members and numerous guests to the Kentucky Derby in each of the past four years.

But when asked to provide details of the “Margin Fund” revenues and expenses used to pay for the annual trips — the May 2016 trip cost $342,330 for 44 board members, staff and guests — Drew Rankin submitted a one-page sheet to The Day with nearly every line item blacked out.

The trips each year were funded through what Rankin called the CMEEC Margin, a fund generated from revenues earned by selling electricity and services to non-member entities, including the Mohegan tribe, some municipalities in Massachusetts and management services for hydropower systems to the Hartford area Metropolitan District Commission, a Hartford area water and sewer agency. The cooperative is owned by six municipally owned utilities including Groton, Norwich and Jewett City.  

The CMEEC Margin summary provided by Rankin shows a budget total for 2016 at $5,570,170. Specific sources of revenues are entirely blacked out on the sheet, and the only expense shown is listed as “delegation related expenses” — which is the Derby trip, Rankin said.

The 2015 column listed a gross grand total of $5,854,725, with $350,000 listed in expenses for the Derby trip, which ended up costing $316,702.

Rankin said details of the Margin fund revenues were redacted for “commercially sensitive reasons,” and he said all the money other than the Derby trip retreat is turned over to the six member utilities each month to help offset electric rates.

“There is no other place where that value is located as it gets processed monthly via our financials,” Rankin said in response to questions about the fund and verification that the revenues other than for the trip are turned over to the member utilities.

CMEEC has hosted the lavish four-day retreats since 2013, with the budgets increasing steadily each year. The invitee list jumped from 27 in 2015 to 44 this year. Attendee lists were not provided for the previous two years.

Rankin adamantly rejected accusations that the trips might have violated ethics codes in both Groton and Norwich, both of which forbid gifts from businesses to city officials who are then expected to vote on issues related to those businesses.

Groton City Mayor Marian Galbraith, who also serves as Groton Utilities chairwoman and was not invited on the trips, said she is investigating the issue. Three ethics complaints have been filed in recent days in Norwich and one was filed in Groton City, city clerks in the two munipalities said Monday.

No information is released about ethics complaints — including the complainant, city official or agency the complaint is aimed at, or the issue involved until ethics commissions review the complaints and decide whether there is probable cause to investigate.

The state Public Utilities Regulatory Authority has no jurisdiction or regulatory authority over municipal utilities or its cooperative organization, said Dennis Schain, spokesman for the state Department of Energy and Environmental Protection, which includes the regulatory authority.

The Norwich Board of Public Utilities Commissioners will discuss the CMEEC trip at its 6 p.m. Tuesday meeting at NPU headquarters at 16 S. Golden St. The meeting is open to the public.

Rankin called the trip a “qualitative investment” that will be examined as to whether it will continue in the future. But Rankin said the trip is not a “gift” or a “reward” to the board members and staff.

“More than likely, it’s never going to happen again,” Rankin said.

But he argued that the Derby trip was one part of running the major success story that CMEEC has created in recent years. CMEEC’s wholesale cost to its member utilities is 30 to 40 percent lower than the cost the member utilities would pay to investor-owned suppliers if CMEEC did not exist.

He said those savings amounted to $116 million over the past four years, and credited the “hundreds and hundreds” of volunteer hours board members have spent working on CMEEC issues. The Derby trips, he said, were an investment in CMEEC’s dedicated staff and board members and their guests.

“It’s not a reward nor is it frivolous,” Rankin said. “Here’s why. That created and helped create an environment and a set of relationships that helps our company perform better.”

CMEEC board members are not paid but receive mileage reimbursements for meetings that often include lunch or dinner, Rankin said. The CMEEC board expenses budget, listed at $665,600 in 2016, includes those costs, as well as consultant reports and presentations required for technical matters, Rankin said. The line item does not include any Kentucky Derby trip costs.

Rankin, CMEEC executive director since 2011, said Monday that the four-day trips to Louisville each year were designed to foster positive relations, trust and good rapport among the six member municipalities who might otherwise put their own municipal interests above those of the entire group.

“It’s absolutely not a compromising of their virtues, values and commitment to their obligation to this company,” Rankin said.

The board does not vote on the Derby funds specifically, he said, other than a vote on the overall budget for the cooperative. The CEO “has the discretion to apply those dollars that he or she deems are prudent (to run the company).”

The Derby trips included only one group gathering, an awards dinner Thursday night at the REVUE revolving restaurant in the exclusive Galt House Hotel in downtown Louisville. CMEEC provided all travel costs, transportation to Churchill Downs for pre-Derby events and the Kentucky Derby. No CMEEC workshops, conferences or presentations were held throughout the four-day event.

“It’s one part of many parts of running a high performance company, and when you start removing the levers available to how you do that, you also start infringing on the results,” Rankin said.

c.bessette@theday.com

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