Says association too wishy-washy on retail choice.

CONSUMER CHOICE MAY TURN BELLY UP THIS Congress but it has hit the gut of the nation's rural cooperative association: a member co-op has dropped out over the NRECA's stance on a federal Choice mandate. But before this story goes to press, the two sides (em the National Rural Electric Cooperative Association and Intermountain Rural Co-operative of Colorado (em may have shaken hands and shaken heads over the "misunderstanding."

That's because the disagreement could amount to nothing more than a cagey move by Intermountain to draw the attention of the NRECA and others to the co-op's vehement anti-wheeling stance. Could Intermountain's $50,000 annual dues check be in the mail?

Stan R. Lewandowski Jr., the co-op's g.m., ironically recommended to his board that it renew membership for the co-op for 1998. The board then voted 6-1 to drop out. Lewandowski, however, hasn't let that vote color his view of NRECA and its apparent opposition to retail choice.

"It's not really a lot of big issues, but it's just sort of a change to: 'Don't be wishy-washy,'" he says. "They just take a wishy-washy stand. It depends on who they talked to last [within the association]."

The defection isn't likely to incite members to leave over dissatisfaction with NRECA's too-pro or too-con position on wheeling. There are wide opinions among the group's 900 co-op members. Lewandowski's sentiments, rooted in low all-requirements contract costs, are among the loudest.

NRECA CEO Glenn English, meanwhile, admits it's difficult because the association must help co-ops in those states calling for retail choice.

"There's not a clear understanding of exactly what it is that NRECA is being required to do in these cases," he says. "Obviously, it is not practical for us to simply say 'no' and that's it. We have to respond to all of our membership and deal with the fact that many states have already taken some kind of action. And our members are looking for ways they can deal with the reality they're facing.

"I think what Stan has to recognize is that we have a responsibility to assist NRECA members no matter what their opinion and attitude is," he says.

English insists the association has taken a strong stance on the federal mandate.

"Our national position is not changed," he says. "We oppose any kind of federal mandate for action by the states and the resolution that we have lays out the points that should be included in legislation (em state or federal."

NRECA's March 20 resolution calls for protecting consumers, having utilities take responsibility for stranded costs, the exclusivity of distribution areas and the security of all-requirements contracts.

Lewandowski says NRECA would have to meet three conditions for Intermountain to rejoin the fold. "Take a strong stance against the federal mandate," he says. "The other thing would be if they just keep quiet talking about the inevitability of [wheeling].

"There are members of the staff that have stated it [was inevitable]. And in fact, I think, even in a conversation I had with Glenn¼ he readily admitted, that there were staff members saying that. And he said, 'I politely told them that was not our position, and it shouldn't happen again.'"

NRECA also should stop "pushing" diversification by co-ops into other services, Lewandowski insists.

"I've talked to Glenn on a number of occasions and generally it'd be 'yeah, yeah, some of this, that, generally we agree with you,' but it seemed like the general direction was going the other way. So by dropping, we did get his attention. And it wasn't a ploy¼ saying we're going to drop you, get attention, and jump right back in.

"If they make some strides to our position, I sure would recommend to our board that they take a look at it."

The g.m. understands that English can't adopt the Intermountain wheeling position. "Because if he did that, then there's some guy who'd say he's going to take off. But I think a good compromise would be to oppose the federal mandate and the members that he wants that are interested in restructuring, they can go to it and the ones that are not, that should be fought on the state level and he shouldn't have anything to do with it."

Lewandowski says English has made strong statements against wheeling, particularly before a Utah legislative committee. Yet, the comments weren't publicized through association publications, or to the media. A memo to statewide co-op associations asking members to lobby U.S. Rep. Dan Schaefer's (R-Colo.) energy and power subcommittee also wasn't promoted, he says.

"Now maybe they were not widely communicated because Glenn figured, 'If I do that, that's going to tick somebody off on the other side.'

"The only thing that is quite frankly puzzling to me, when NRECA came out with their list of conditions as far as retail wheeling was concerned¼ opposing a federal mandate is not on that list."

Lewandowski says the fight wasn't because of dues, which he guesses fall in the average range. "The dues have nothing to do with it," he says.

English suggests the strongest argument against Lewandowski's posture is that the NRECA resolution on retail wheeling has been up for vote before the membership twice. "And neither Stan nor anyone else stood up and disagreed with it," he says.

"Our position is very clear," he reiterates. "We oppose any kind of federal mandates or retail wheeling on the states¼ and second is the fact that there is some very important criteria that must be met before we could look at any kind of retail wheeling on the federal or state level."

English says the association must be realistic. "We've got 14 states now that have taken some kind of action that is going to provide some kind of change in the electric utility industry in those states. And those states are asking us for help in how to deal with this. We can't ignore reality."

Co-op members in the Northwest recently asked for more help from the national association in telling them what's happening in the rest of the country and in assisting them with what's going on in their states. "Quite frankly, I don't have the resources at this point to keep up with all the demand we've got," the CEO says.

English says the association states its views in its publications; Lewandowski penned one editorial. Publicity is left to the whim of the media, he says. "I've never said [wheeling] was inevitable. We have never said it is inevitable."

On the other hand, the administrator of the U.S. Rural Utilities Service has described wheeling as unavoidable.

Diversification is not being pushed, English insists. "To the contrary, we're urging our members to look very carefully before they leap into these new businesses."

English remains assured that he can win back Intermountain to the NRECA. That confidence, he says, is "based on sitting down and exploring these issues. Obviously as we go through this, I don't find that there are any differences¼ I guess that's what I'm puzzled about."

English says NRECA and the co-op will meet to "clear the matter up. At this point that date hasn't been set. [Lewandowski] did tell me he would let me know when that would be appropriate. So I'm waiting for his call."

Something the sides do agree on is that federal legislation won't move this year. Next year is a question mark.

"I have not sensed among the members of Congress an interest in passing legislation and putting it on the President's desk," English says. "Election years are not particularly good years for passing controversial legislation."

Congress, Lewandowski predicts, will leave the issue alone until it sees what states do. It will take more than half the states to take the plunge for Congress to act, he says. "Most [federal politicians] look at it like it's dead in the water," he says. "Except Schaefer. He's the only guy who's saying he's going to get markup on a bill."

Joseph F. Schuler Jr. is an associate editor of Public Utilities Fortnightly.

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