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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Finally, South Carolina Finally Cracking Down on Electric Coop Abuses

Watch video here https://www.thestate.com/news/politics-government/article216388750.html

Kawakawa      A couple of years ago after extensive research Social Policy published two extensive studies focusing on rural electric cooperatives in all of the southern states and their lack of diversity and democracy.  We didn’t throw the rock and hide the hand.  Labor Neighbor Research & Training Center and its Rural Power Project sent a copy of the studies to every single one of the cooperatives as well as their state and national organizations.  We know that they circulated it widely at the national level to all cooperatives in the association.  The direct response we received before and after the reports, either soliciting information and their viewpoint or reaction, even opposition, to the stark facts of the reports:  zero!  We were completely stonewalled.

There’s an old saying though, even in the Age of Trump, “you can run, but you can’t hide,” and sure enough some chinks have developed in their wall in South Carolina of all places thanks to reports by Avery Wilks in the capital city paper in Columbia, The State.  Wilks ran a piece recently with the headline, “High Pay and Expensive Perks:  Has “Absolute Power” Corrupted SC Electric Co-ops,” which gives you a sense of his work, and his research in a series of pieces has duplicated our own with a razor focus on South Carolina, rather than the whole south.

Here are some of the scandals he described:

  • part-time board members at Santee Electric Cooperative doubled their pay for each meeting they attended to $450, held “wasteful” meetings to collect more pay from customers and awarded themselves cash bonuses each year, according to an October 2010 audit.
  • The Kingstree-based co-op spent nearly $342,000 in one year — far above the national average — to send its full nine-member board to out-of-town events and conferences, with some trustees taking their spouses along at the co-op’s expense.
  • South Carolina coops paid their board members nearly twice the national average. In part, that is because all 20 co-ops have offered health insurance to their trustees, 17 have covered former board members and 16 have covered board members’ families. A task force of the co-ops’ national trade association recently advised against paying those benefits in a secret report, and a prominent co-op attorney has warned that paying health insurance benefits to former trustees is not legal in South Carolina.
  • Coops spent about $120,000 last year, on average, to send their boards to educational conferences across the country. Some co-op directors attended from six to 14 conferences in locales ranging from Nashville to San Diego to Washington, D.C..
  • In many cases, coops have given board members co-op-funded retirement plans, spending money that could have been returned to customers. At one co-op, that plan paid out $81,000 in lump-sum payments to each board member. At another, the plan paid nearly $135,000 to every board member.
  • Seen some co-op board members retain their seats for decades. At 17 co-ops, boards pick the members of the nominating committee that screens candidates for board positions, effectively giving directors control over any potential challengers. Last year, for instance, Tri-County’s nine-member nominating committee for the co-op’s board included six direct relatives of board members.

All of this is happening in every state throughout the South with the national association and politicians doing nothing.  And, Wilks doesn’t even touch on the issue of racial and gender diversity that we documented.  It is obvious that this is a hot mess.  South Carolina legislators are now proposing bills to force more transparency and democracy on the electric cooperatives in their state.

Now if we could just get more local papers and local legislators throughout the South to get on the job and join us in taking a hard look at the practices of rural electric cooperatives maybe they could be restored to their founding, democratic principles.

How about that?

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