Insurance is more than half of compensation for WST directors

In last week’s edition of The Era-Leader, an article was published concerning the Louisiana Public Service Commission’s recent order attempting to rein in the compensation and benefits of rural electric cooperative boards of directors.

In that article, The Era-Leader quoted the president of Washington-St. Tammany Electric Co-op’s board of directors, Dr. Francis Cefalu. He explained that WST directors receive $500 per month for attending their regular meeting, plus health insurance. He said if a rare second monthly meeting is held, the directors get an additional $200. Based on that, The Era-Leader article stated: That would place WST board members well below the statewide average of $26,250 per year in directors’ compensation.

After that article was published, the Public Service Commission provided The Era-Leader with figures that show the $26,250 per year statewide average includes health insurance, but does not include non-taxable compensation for travel, meals, education, etc. Based on this new information, how does the WST board of directors actually compare with the statewide average? The chart accompanying this article shows that the WST board of directors received a total of $186,265 in both taxable and non-taxable benefits and compensation for the year 2017 (the most recent year for which a full report is available.) For nine board members, that’s an average of $20,696 per board member. In taxable benefits and compensation, the WST board received a total of $150,951. That’s an average of $16,772 per board member.

The total $186,265 benefits and compensation for directors in 2017 breaks down as follows:

  • 52% of it is taxable insurance benefits: $95,751
  • 30% of it is taxable per diems for attending meetings: $55,200
  • 18% of it is non-taxable for travel, meals, education, etc: $35,314

Walter Sylvest, manager of finance for WST, explained that the co-op has an excellent insurance provider. The provider bases its premiums on a person’s medical history, age, and gender, as is common with plans for more than 100 participants, he said. “The WST insurance plan is owned by the NECA (National Electrical Contractors Association) and the IBEW (union). The NECA/IBEW Family Medical Care Plan is the most cost-effective offering WST received. The taxable benefits are just the premiums. WST does not pay deductibles or copays,” Sylvest said.

Sylvest noted that some of the directors have single coverage, some have self plus spouse coverage, and some have family coverage. “Some have no coverage,” he said. Regardless of the level of coverage selected, WST pays the entire premium. In a case where the spouse of a board member has coverage through their employer, the spouse is not eligible for coverage through WST.

The Louisiana Public Service Commission’s order regarding electric cooperatives in the state limits per diems to $375 per meeting. Per diems are used because cooperative board members traditionally can’t receive a salary. From the very beginning of co-ops in 1935, it was always intended that board members would simply be volunteer local citizens who did not receive pay. WST board meetings last about two hours each month, sometimes longer and sometimes shorter, according to a long-time WST employee. The board members also attend occasional conferences. New board members take educational classes to learn about the issues facing rural electric cooperatives.

The PSC order also requires each co-op to inform its membership of all compensation for directors and to allow the membership to vote either approval or denial of director compensation. In addition, the order requires co-ops to have term limits for its board members, which would be a maximum of 18 years on the board. At present, two of the current WST board members already have more than 18 years on the board, and a third board member is approaching 18 years.

The PSC members have said their concern is that each additional dollar of expense for a co-op is a direct increase on the customers’ monthly electricity bill. They said because the customers of a co-op are also the owners and stockholders of the co-op, these customers are fully entitled to know exactly what their board members receive in compensation.

The Association of Louisiana Electric Cooperatives, which represents all of the co-ops in the state including WST, is seeking to have the PSC’s order on compensation overturned. The association is behind a bill being introduced in the state legislature that would prevent the PSC’s oversight of cooperatives except for setting rates. If the bill, titled House Bill 461, actually becomes law, the PSC would still approve rates, but would not have the authority to order most of the changes that were included in the April 12 order. However, a spokesman for the PSC told The Era-Leader that the PSC’s mandate to oversee the cooperatives is based on the Louisiana state constitution, not on what the legislature does.

UPDATE: Shortly before press time on Monday of this week, the author of House Bill 461 voluntarily deferred it. The Era-Leader will follow the bill and we will inform our readers if it is brought back up again.