Former Flathead Electric Co-op (FEC) manager Warren McConkey was dismissed for the third time late last month, when the Montana Supreme Court upheld a district court’s decision to dismiss McConkey’s wrongful termination suit against the co-op.
The Supreme Court also upheld the district court’s decision to dismiss McConkey’s libel suit against an FEC board member who wrote letters to local newspapers critical of the manager’s performance.
The FEC board of directors fired McConkey in February 2002, after FEC customers saw rates shoot up 29 percent in April 2001, and 12.5 percent in October 2001.
Before the rate increase, FEC, under McConkey’s direction, had purchased the Montana assets of PacifiCorp, upping the co-op’s customer base from 12,000 to 55,000 people.
To supply the new customers, according to Mark Johnson, assistant general manager for FEC, the co-op supplemented energy bought from the Bonneville Power Administration (BPA) with energy purchases from PacifiCorp. The problem, for FEC, was that BPA sells its electricity at prices based on the cost of production, while PacifiCorp sells theirs based on market prices.
When FEC entered into its contract with PacifiCorp in 1998, market prices for energy were reasonable. It wasn’t long before market prices became unreasonable. FEC went from paying $40,000 to $840,000 per month for energy produced at Bigfork Hydro.
According to court documents, McConkey claimed co-ops would fare well with market pricing, and that the enlarged customer base would help FEC negotiate better prices.
But co-ops fared poorly with market pricing, and the larger customer base just left more people stuck with high-priced power. The increased expenditures on energy, as well as the debt FEC incurred by purchasing PacifiCorp’s assets, forced the co-op to raise rates and retain bankruptcy counsel.
Writing for the court, Justice John Warner states that decisions made by McConkey justified his dismissal. McConkey did not return calls from the Independent for comment.
Since McConkey was fired, FEC has had two interim managers, and has been managed by Ken Sugden for the last year. Since McConkey’s firing, the co-op has decreased its debt tenfold, and lowered rates by a total of $5 million per year.