Meehan: Holy Cross Energy hasn’t made the case
Re: Proposed Holy Cross rate restructure:
Form 990 filed with the IRS for the years 2019-21 shows Holy Cross profit roughly equal over the three-year period at about $1 million/yr. — the lone exception being calendar year 2020 when it jumped to $1.55 million. There might have been more people working from home that year due to COVID-19 and, therefore, using more electricity.
During the same time frame, electric sales increased each year and generated $142.4 million in revenue for 2021. Cost of power held steady, while distribution expense increased to $17.0 million from 16.4 million in 2019.
Two of the biggest expense increases came from executive compensation, which went from $3.9 million in 2019 to $4.8 million in 2021. Also, investment management expense went from unreported in 2019 to $6.7 million in 2021.
In short, I don’t think a good enough case has been made for the restructure. The increase in distribution expense has been more than compensated by rising electric sales.
To justify a rate increase because of rising compensation expense and an exponential investment management expense increase hardly seems justified to a population that is struggling just to stay living in the Holy Cross service area.
It may be at some point down the road that a small, upward adjustment in the distribution charge can be justified, but that point has not yet arrived.
Mike Meehan, CFA, MBA