The Austin Chronicle

Electric Co-op's Board Under Fire

By Kimberly Reeves, June 22, 2007, News

Pedernales Electric Cooperative's board of directors faced an angry challenge from its membership over the weekend, as hundreds of the co-op's customers showed up at the board's annual meeting to criticize election procedures and financial practices.

The protests were stirred up by a lawsuit filed by Lee Beck Lawrence and attorneys Jan Soifer and William Ikard, alleging inadequate procedures of board elections, excessive payments to board directors, failure to release profits to co-op members as required by law, and mismanagement in the purchase of a New Mexico software company.

More than 600 people packed the room for the annual meeting. In addition, more than 37,000 proxy ballots were mailed in to the co-op for the election. Few, if any, co-ops – most are usually rural and isolated – deal with an election this big. According to the lawsuit, Pedernales has the distinction of being the largest co-op in the nation, with 213,000 members and a 24-county service area as big as Massachusetts.

Member Dorothy Powell of Cedar Park was typical of most of the 33 speakers at the meeting. She wanted to know how much directors were paid, what duties they did for that pay, how the co-op's money was being invested, and a complete disclosure of any conflicts of interest known to the board. "Someone called this a good ol' boys club," Powell said. "We need to open it all up."

It was hard to separate wheat from chaff in this debate. Members are angry that the co-op held more than $200 million in reserve instead of refunding it to members. The board insisted the sum was necessary to address an anticipated wholesale electric rate increase from the Lower Colorado River Authority. Salaries, including $188,000 for board Chair W.W. "Bud" Burnett, do appear high, but Attorney General Greg Abbott's office is unable to intervene. The attorney general only intervenes in nonprofits, not co-ops.

Two opposition candidates backed by the group PEC4USusan Barnett and Beckie Morris – failed to unseat sitting board members on Saturday. Actually, no one expected them to do so, given current bylaws. Instead, their candidacy was intended to symbolize an opposition to the current election procedures, which limit candidates and stack the deck heavily in favor of incumbents, many of whom have served for at least two decades. Co-op general manager Bennie Fuelberg has been employed by the co-op for 30 years.

Barnett offered a measured speech to the board, suggesting the co-op consider amending its bylaws to offer elections similar to ones in the neighboring Bluebonnet Electric Cooperative, where potential candidates must gather petitions to run for the board. She also suggested the Pedernales territory be divided into single-member districts to provide proper representation. The co-op's 24-county territory stretches from Cedar Park on the north to Junction on the south.

Board members and management appeared more flummoxed than conspiratorial. Even board member O.C. Harmon – the target of criticism – stood up to speak for open elections. Still, real changes to the board can't occur without a bylaws change. Burnett said he would entertain amendments at the next board meeting.

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