Bill that would boost state control of CMEEC debated at hearing

March 5, 2019

Hartford — A legislative committee heard differing opinions Tuesday on whether the Connecticut Municipal Electric Energy Cooperative is recovering from excesses that led to federal corruption charges against five officials, or needs additional state oversight.

A proposed bill before the General Assembly’s Energy and Technology Committee would require annual state audits of CMEEC’s finances, boost the pay for the municipal electric consumer advocate from 70,000 and add 100,000 in personal expenses to former board chairman James Sullivan of Norwich.

Sullivan, CMEEC CEO Drew Rankin, Chief Financial Officer Edward Pryor, former Norwich Public Utilities General Manager John Bilda and former Groton board member Edward DeMuzzio were indicted in November on federal corruption charges.

The derby and golf resort trips became public in 2016 and led to a 2017 state law that created the municipal electric consumer advocate position, the five-year forensic audit and required CMEEC board functions to be held in-state.

Somers on Tuesday credited Municipal Electric Consumer Advocate Bill Kowalski with persuading the CMEEC board to make some reforms and with ferreting out additional questionable CMEEC expenses contained in the forensic audit.

“Without him there, we don’t have a truly independent voice,” Somers said.

Under the 2017 law, Kowalski’s compensation was reduced in the second year from 50,000. The new proposal would keep his compensation at 30,000 for consultants to study complex electric rate structures and contracts.

Committee members questioned wording that would limit CMEEC’s ability to invest in power production projects, such as the solar power projects in Norwich, a fuel cell at the U.S. Naval Submarine Base in Groton and several micro-generation plants used during peak times and as power backups for host facilities, including The William W. Backus Hospital.

State Sen. John Fonfara, D-Hartford, the committee’s vice chairman, said those power investments generate about 70,000 but objected to the added 5 million to $14 million in “direct” return to CMEEC member utilities and help offset peak power costs.

Somers earlier said CMEEC still could make investments in power projects but would need legislative approval first.

The bill also would mandate that CMEEC implement the recommendations of the five-year forensic audit, including that CMEEC return those revenues to the members each year. Currently, CMEEC retains revenues for each member in dedicated funds until the members request release of the funds.

Hedrick said the forensic examination was just completed in December and the board was reviewing its contents and recommendations.

State Sen. Paul Formica, R-East Lyme, asked Somers if she felt CMEEC was “beginning to move forward” under the scrutiny of the municipal advocate.

Somers responded she sees “slight movement forward” but said the cooperative needs more transparency, with portions of its budget still redacted and power procurement contracts concealed as trade secrets.

Somers said the proposed changes “lay the ground work for what I believe will be a multiyear process of reforming CMEEC,” including annual state audits.

CMEEC interim CEO Mike Lane opposed the bill and told the committee the provisions would “add substantial cost to CMEEC and to its member utilities and customers.” He said CMEEC has made many changes since October 2016.

“I want to assure the committee that we acknowledge our mistakes,” said Lane, who joined CMEEC in October 2016 and did not participate in the trips. “We have learned from our mistakes. We have taken a number of concrete actions to ensure proper governance and oversight at CMEEC, and promote transparency and accountability, consistent with our public charter.”

He asked the committee to allow CMEEC to continue to make improvements under the 2017 law without added restrictions in the new proposed bill.