Dylan Lightfoot Staff Writer firstname.lastname@example.org
November 8, 2013
Blue Ridge Electric Membership Corporation’s Doug Johnson is the highest-paid electric cooperative executive in N.C., with $756,291 in total compensation reported from BREMCO and its subsidiaries in 2012.
Johnson, as president and CEO of BREMCO, which serves 75,530 members in seven northwestern counties, received $511,037 from the member-owned nonprofit last year, according to the company’s tax return.
Another $245,254 was paid to Johnson in 2012 from BREMCO’s wholly-owned subsidiaries, Blue Ridge Energies and RidgeLink, two private, for-profit companies also led by Johnson.
In 2011, average chief executive pay for all 26 N.C. electric co-ops was $315,429, based on IRS form 909 returns. Total CEO compensation is reported as the sum of “reportable compensation from the organization,” and estimated “other compensation from the organization and related organizations,” such as subsidiaries.
Johnson was paid $806,749 in 2011, $491,257 more than the average, and $302,857 more than the next-highest-paid co-op CEO. Reporting an average 60-hour work week as the head of BREMCO/BRE/Ridgelink, Johnson earned $14,544 per week in 2012.
Not all co-ops are the same
According to the N.C. Association of Electric Cooperatives, Cape Hatteras EMC, serving Dare County, provides power to 7,400 members, with 25 employees and 340 miles of line, while Energy United, serving 19 counties in central N.C., boasts 120,900 members, 175 employees and 12,200 miles of line.
Revenues also vary. Energy United posted $221 million in 2011, while Dudley-based Tri-County EMC took in less than $16 million.
BREMCO, serving Ashe, Alleghany, Wilkes, Watauga, Caldwell, Alexander and Avery counties, with 175 employees and 8,000 miles of line, reported total revenues of $138 million in 2011, and $143 million in 2012.
Co-ops that appear comparable to BREMCO pay their chief executives considerably less, such as Rutherford EMC, whose CEO grossed $193,004 in 2011. REMC, which serves 67,300 members in a 10-county area, with 183 employees and 7,083 miles of line, posted revenues of $133 million that year.
Brunswick ECO, with 83,000 members and over $163 million in revenues in 2011, paid $492,521 in CEO compensation that year.
Pedernales Electric Cooperative of Johnson City, Texas, with 250,000 members — the largest co-op membership in the nation — and $600 million in annual revenues, paid their CEO $398,075 in 2011.
‘Apples to Apples’
According to BREMCO Director of Public Information Renee Whitener, any such analysis of electric co-ops is “not an apples to apples comparison.”
BREMCO is a big operation: bigger than any other co-op in the state, Whitener said, and the largest co-op in the nation.
Serving seven rural counties in mostly mountainous territory, BREMCO’s owns its own transmission system, an extensive, complex, power grid which includes a 17-mile alley of 230,000 kilowatt lines strung “up the mountain” from Wilkes County, said Whitener.
And BREMCO isn’t just a co-op, but three companies under one banner, Whitener said.
Blue Ridge Energies “is a private, for-profit company that provides heating fuels, propane, and propane appliances to residential and business customers from offices in Lenoir, Boone, West Jefferson, and Sparta,” according to their website.
Ridgelink LLC was “formed to help Blue Ridge Electric provide value to its membership by more fully utilizing the fiber optic system the cooperative has put in place for its electric system,” according to their website. The company sells surplus bandwidth on BREMCO’s fiber optic lines, with profits used to keep the co-op’s rates down, Whitener said.
Profits from Blue Ridge Energies and RidgeLink go to offset rate increases, generating an average $15 million per year in member savings, she said. A 2.5 percent rate hike, announced by BREMCO in August and taking effect last month, would have been significantly higher without these stopgap revenues.
According to BREMCO Senior Vice President and Chief Administrative Officer Julie O’Dell-Michie, Johnson also personally negotiates the co-op’s wholesale power rates with provider Duke Energy, a service most other co-ops delegate to the NCAEC for a fee of $200,000 or more per year.
Overseeing such a large, multi-faceted operation, and the dozens of highly-certified technicians needed to run it, requires exceptional management skills, O’Dell-Michie said. “We have the talent and expertise in Doug Johnson.”
Below the 75th percentile
At most co-ops, CEO compensation is determined by the board of directors, O’Dell-Michie said. In Johnson’s case, the 12 BREMCO board members — paid an average annual salary of $24,508 with a work week averaging 5.4 hours — set a salary ceiling.
“Per (Board of Directors) policy, total compensation is capped at the market’s 75th percentile, which was $630,000 in 2011,” according to information provided by BREMCO for this story.
But Johnson’s compensation is ultimately determined by an independent consultant group, which bases its decisions on comparison with similar executive positions in the region, O’Dell-Michie said. An analysis of Johnson’s “Total CEO Peer Group,” provided by BREMCO, shows that “Blue Ridge CEO salary for 2012 is approximately 15 percent higher than the 50th percentile, and 23 percent below the 75th percentile.”
Johnson’s compensation also includes retirement benefits accrued after 35 years with BREMCO, she said.
“We believe we have a process that’s fair and ethical (by which) each employees salary is determined,” O’Dell-Michie said.