Change Coming to Rural Electric Cooperative Governance – Finally!

New Orleans    Cooperatives are something that many of us hold up as models of how things might work in a better – and different – world than the one where we now live and work.   Rural electric cooperatives display their democratic and membership principles as part of the cooperative movement since the 1930s on their walls, websites, bylaws, and membership reports routinely.  As reports issued by ACORN International and the Labor Neighbor Research & Training Center on RECs in the Southern states in recent years have underlined, the actual practice has gone far afield, especially when it comes to governance and democratic practice, self-dealing on pay and benefits, and inclusion of African-American, Latino, and women representation on their boards.

One of the highlights of 2018 in this struggle has been the fact that reporters increasingly in South Carolina and Louisiana have also picked up the trail in some cases using the reports we had assembled as well.  Key issues have been payments to board members as we stressed, but also junkets accompanied by spouses to various logrolling conferences attended by many as perks, which we had not underlined, but certainly where coop members are also footing the bill in their electric rates.

A recent report on coming agreements between the cooperative board associations and the Louisiana Public Service Commission (PSC) indicate that the tide may be finally turning in our direction, at least on some of these issues.  Critically, the early indications indicate that the PSC will mandate term limits for directors, which will be a huge step in the right direction of allowing members to take back control from some of these folks who have been holding on for decades.

There will also finally be limits on so-called “reimbursements” for board attendance.   As our reports indicated the evidence seems to point to manager’s salaries rising for many southern cooperatives in almost a direct ratio to also increasing the pay of directors, as recorded in their IRS 990 filings as 501c3 nonprofit organizations.  These elected positions are supposed to be voluntary, but have become key income sources for many directors, encouraging them to hold on to the posts for years and years.  This PSC action could cap that off.

An issue still unresolved, amazingly, is health insurance, which is a surprising and unknown benefit for volunteer board members, but is all part of this mutual backscratching and log-rolling, and a very pricey benefit at that.  In some cases, the PSC found that family members were also being covered!  All national cooperative recommendations abhor this practice, but reportedly at the expense of the cooperative members, this may be unresolved in Louisiana – and certainly elsewhere – but has to go.

None of these reforms will solve the fundamental issues, but this will be a sea change for many cooperatives, and should be a warning that change is coming, ready or not, to the rest of them.  Now, if we can just hold the Louisiana PSC’s feet to the fire, and get other states to get on board, we will really see some change come as members are enabled to seize back the powers that should have always been theirs.

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How Many Rural Electric Cooperatives Can Stand the Glare?

New Orleans      In 2016 after an exhaustive research project on all of the rural electric cooperatives in the twelve Southern states ACORN and the Labor Neighbor Research & Training Center published two reports on our website, as well as in two issues of Social Policy.  One looked at the lack of diversity and absence of any governance accountability in the cooperatives and the other looked at some of the same issues in employment as well as the pay and benefits board members and their executives were giving themselves.  Despite circulating the reports to the cooperatives, state legislators, media outlets, Congressional delegations, and regulatory agencies, it was amazing how we were stonewalled.

Finally, some of the walls around this amazingly insular but significant rural economic and employment institution are beginning to show signs of crumbling as reporters and even some regulators stumble over their featherbedding and self-dealing particularly.  We’ve cited earlier the work of Avery Wilks at the State in Columbia, South Carolina, and his series largely about director financial abuses in that state.  The Advocate papers in New Orleans and Baton Rouge, particularly David Mitchell, have also begun to take a harder look at some of these issues as well, partially because the issues at DEMCO, which has tried to unsuccessfully rebrand from its name as Dixie Electric Membership Corporation, has been catching fire from elected regulators of the Public Service Commission.

The CEO of DEMCO was forced to resign short months before he was officially retiring for failure to reimburse the cooperative for a decade for a $14,000 generator installed at his house.   Reporters have also headlined the fact that employees enjoyed staying at the beach condo of a contractor for the cooperative.  They have also mined the audits DEMCO was forced to have done for other pieces on board members pay and perks.

In hearings, four of the commissioners jumped on the rural electric cooperatives with both feet over their compensation and financial practices.  They have now vowed to scrutinize the sweetheart compensation arrangements between board members and managers, which is at the heart of the second of ACORN and the LNRTC’s reports.  They swear that they will take this into consideration when asked to review rate increase requests from the cooperatives in the future, which is also good to hear.  We’ll once again try to put the reports in their hands to see if they will also finally look at the fact that so much of the representation of the ostensibly democratic body is stuck in the 1950s where race and gender are concerned.

An arch-conservative political science professor at LSU who writes a column for The Advocate sees political intrigue here on the part of the commissioners.  He believes this is obfuscation meant to cover their loss of a boondoggle involving exporting energy from Oklahoma windfarms.  He is correct in hitting them for denying the Claiborne Electric Cooperative the ability to extend internet service in its service areas, which is widely seen around the country as fully appropriate for cooperatives.  For the rest, its mainly more of his usual conspiracy-tinted offering.

For our part we have to believe the PSC is finally doing the right thing, even if for the wrong reasons, if it finally puts an end to the logrolling and self-dealing, anti-democratic practices of cooperative boards.  We’ll really cheer if they also finally address the self-perpetuating practices undemocratic boards have of keeping themselves in and women and minorities out.

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