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Page 3 cal violation based on Commission rules.


Western Farmers: PUD reviewed the contract and settlement agreement between CVEC and Western )DUPHUV 38' XQGHUVWDQGV WKHUH ZDV FRQIXVLRQ RI PDQ\ SDUWLHV DURXQG WKH


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the CVEC membership. During the October 20 meeting in Shawnee, the board member who raised this FRQFHUQ FRQ¿UPHG WKDW KH ZDV XQFOHDU KRZ LWHPV ZHUH KDQGOHG DQG WKDW KH EHOLHYHG FODUL¿FDWLRQ ZRXOG KDYH KHOSHG WKH PHPEHUV DV ZHOO DV KLP WR XQGHUVWDQG 38' ¿QGV WKDW WKH DJUHHPHQWV VLJQHG E\ DOO SDUWLHV FOHDUO\ OD\ RXW WKH WUHDWPHQW RI WKH UHIXQGV DQWLFLSDWHG E\ &9(& ,W LV FOHDU WR 38' WKDW WKH UHIXQGV RZHG ZHUH XWLOL]HG WR UHGXFH WKH SD\PHQW UHTXLUHG E\ &9(& ZKHQ HQWHULQJ LQWR WKH XSGDWHG FRQWUDFW 7KLV W\SH RI RIIVHW LV D QRUPDO SUDFWLFH DQG DFFHSWDEOH LQ WKH UHJXODWRU\ HQYLURQPHQW 7KHUHIRUH 38' ¿QGV QR UXOH RU ethical violation based on Commission rules.


Operating Agreement: %DVHG RQ 38'¶V LQYHVWLJDWLRQ LW EHFDPH FOHDU WKHUH ZDV D PLVXQGHUVWDQGLQJ RI the operating agreement between the parties. It had been inappropriately represented that the monthly pay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¿QGV QR UXOH RU HWKLFDO YLRODWLRQ EDVHG RQ &RPPLVVLRQ UXOHV


David Swank’s Role: &RQFHUQV ZHUH UDLVHG UHJDUGLQJ 0U 6ZDQN¶V UROH ZLWK WKH PHUJHU 7KH LQWHUYLHZV GLG QRW UHVXOW LQ DQ\ DOOHJDWLRQV WKDW ZDUUDQWHG IXUWKHU LQYHVWLJDWLRQ 7KH FRQFHUQ ZDV WKH OHYHO RI VDODU\ IRU 0U 6ZDQN DV PRVW GLG QRW XQGHUVWDQG WKH SUHYDLOLQJ PDUNHW UDWH IRU OLNH SRVLWLRQV 7KHUHIRUH 38' ¿QGV QR UXOH or ethical violation based on Commission rules.


Compliance Plan: PUD accepted the compliance plan as submitted by CVEC. However, PUD is aware that PRGL¿FDWLRQV WR WKH PHUJHU DQG RU WLPH OLQH PD\ UHVXOW LQ D QHHGHG UDWH LQFUHDVH WR DGKHUH WR WKH FRPSOL- DQFH SODQ 38' ZLOO ZRUN ZLWK &9(& PDQDJHPHQW DQG WKH ERDUG WR SURFHVV DQ\ UDWH UHTXHVW LQ DQ HI¿FLHQW PDQQHU WR DOORZ IRU TXLFN UHVROXWLRQ RI FRPSOLDQFH UHODWHG PDWWHUV


Board Member Action: PUD and the OCC are limited in statutory authority as it relates to managerial discretion. These limits impact cooperatives as well as investor-owned utilities. However, an issue has been XQFRYHUHG FRQFHUQLQJ D ERDUG PHPEHU RI &9(& 7KH ERDUG PHPEHU LQGHSHQGHQWO\ UHDFKHG RXW WR DQ LQYHVWRU RZQHG XWLOLW\ VHHNLQJ LQWHUHVW LQ D SRWHQWLDO SXUFKDVH RI WKH &9(& DVVHWV 7KH ERDUG PHPEHU FRQ- ¿UPHG LW ZDV QRW D ERDUG DSSURYHG DFWLRQ 38' LV FRQFHUQHG DV WKLV DSSHDUV WR EH D YLRODWLRQ RI WKH &9(& SROLFLHV 38' EHOLHYHV WKDW LI DQ\ DFWLRQ LV WR RFFXU IURP WKH FRQGXFW RI WKH ERDUG PHPEHU LW PXVW RFFXU E\ DQG WKURXJK &9(&¶V ERDUG DQG JHQHUDO PHPEHUVKLS 38' ZRXOG UHFRPPHQG &9(& UHYLHZ WKH LVVXH ZLWK - 3 'XYDOO LQ RUGHU WR HQVXUH DOO FRRSHUDWLYH E\ ODZV DUH IROORZHG IRU WKH SURWHFWLRQ RI WKH FR RS PHPEHUV


'XULQJ WKH 2FWREHU PHHWLQJ 0U 'XYDOO H[SUHVVHG FRQFHUQV RYHU VRPH RI WKH LWHPV OLVWHG DERYH VXFK DV the Western Farmers contract, David Swank, and the consolidation. Each issue was discussed thoroughly DQG 38' DQVZHUHG DOO WKH TXHVWLRQV SRVHG RI ZKLFK WKH\ KDG NQRZOHGJH 38' WRRN QRWH RI KLV DGGLWLRQDO concerns and added them to the areas reviewed and discussed above. Mr. Duvall discussed the anonymous letter that had been circulated as well as his conversations with Mr. Harwell. Mr. Duvall ended the discus- sion saying he was against the consolidation and would work against it but was unable to give us any more UHDVRQV EH\RQG WKRVH ZH ZHUH DEOH WR H[SODLQ 38' GLG QRW ¿QG DQ\ UXOH RU HWKLFDO YLRODWLRQV RQ WKH SDUW RI &9(& DIWHU UHYLHZLQJ 0U 'XYDOO¶V DUHDV RI FRQFHUQ


$OO DUHDV RI FRQFHUQ KDYH EHHQ DGGUHVVHG WR WKH H[WHQW SRVVLEOH DQG 38' GRHV QRW EHOLHYH WKDW DQ\ LQDS- SURSULDWH DFWLRQ KDV RFFXUUHG RQ WKH SDUW RI &9(& RU &5(& LQ UHJDUG WR WKH PHUJHU 7KHUHIRUH 38' EH- OLHYHV WKH DOOHJDWLRQV DUH EDVHG RQ PLVXQGHUVWDQGLQJ RI WKH IDFWV UHODWHG WR WKH SRWHQWLDO PHUJHU


Continued on page 4.


The ElectraLite


June 2016


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