Rock Island is a blackhole | Guest column

by Alex MacLeod

There is mounting evidence that OPALCO’s Rock Island Communications continues to be a black hole into which members’ money is being dumped in the hope that one day — some day — it will begin pumping big profits back into the cooperative.

More seriously, there is also growing evidence that OPALCO’s management, with the complicity of its board, is hiding the degree to which Rock Island is failing to meet its most basic financial targets. The deception is egregious and deliberate and needs to be addressed.

Question: How do you make an underperforming business look like it is succeeding and meeting expectations?

Answer: Quietly — very quietly — lower the expectations, a lot.

That is what OPALCO management and its board have done. After having reported Rock Island’s progress against its 2016 budget for a quarter, it quietly changed those targets to different, and much lower numbers, which it now identifies as Rock Island’s “business plan.”

How big are the changes? Well, Rock Island’s planned revenue for 2016 was dropped by more than a half-million dollars, or more than 20 percent, from $3.211 million to $2.646 million, and it’s not even on a pace to meet this lower expectation.

But by changing the numbers, Rock Island magically goes from a flood of red ink to something that looks marginally successful. This all being done under the guise of an updated Rock Island business plan that OPALCO is keeping secret.

No wonder.

While revenue expectations have been significantly reduced, spending has not. Rock Island has blown through $6.5 million in 15 months of a $7.5 million start-up “loan” from OPALCO that was to last 36 months.

Even under the new plan, operating expenses through the first quarter are running more than 15 percent ahead of plan ($1,018,000 versus $880,000) and its losses have grown by 30 percent — from a $377,000 loss to $491,000 — more than the downward-adjusted plan.

Next year, Rock Island is supposed to be financially healthy enough to pay back to the cooperative the $7.5 million start-up loan. Don’t count on it. At best, the “loan” will be repaid only if OPALCO co-signs for it, at which point it is just paper-shuffling.

What all this means to us members is our electric rates will continue to rise. Five full pages were devoted in this month’s board report to weather forecasts for the year ahead, laying the groundwork for arguing, yet again, that lack of electric demand will drive up rates.

As before, that is just a smokescreen to hide the real reason: Something north of $20 million that OPALCO has committed to an internet business and that we are paying for as if it were electricity and which, in its best-case scenario, will only benefit about a quarter of the membership.