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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Co-Op Leaders in the Bunker, but Feeling the Heat

coversummer2016New Orleans   The cover story in this issue of the quarterly journal, Social Policy, laid out the case once again on the lack of diversity and democracy in the rural electric cooperatives in the 12-state southern area. The minimal representation of African-Americans and Hispanics is region-wide despite the huge populations of both of these groups throughout the region, frequently occupying majorities in many of the service areas of the cooperatives. The regional statistics are less than 5% representation for African-Americans and less than 1% for Hispanics. Women fare only slightly better, though they represent a majority in the South when we looked at these same 313-odd electrical cooperatives.

Cooperatives ostensibly are membership-run institutions with every member getting to vote to elect their representatives and on have a say at annual meetings on matters of policy. All of these cooperatives have been the beneficiaries of extensive grants and loans of public monies, usually federal, dating back to the New Deal, and many still are receiving discounted interest rates and loans for their programs and generating facilities. The USDA and their own literature claims they are critical economic development and social service providers in rural areas, and as a multi-billion dollar set of institutions they are a significant employer and economic presence in their service areas as well. Almost all of their websites and information includes language claiming that they do not discriminate. But, here we sit with facts and figures that undermine all of these claims and provide evidence of the opposite.

Frequently the story and the earlier report speak of these cooperatives and their leadership as “frozen in the fifties,” as if they have been able to hunker down and pretend time stopped and the civil rights movement, women’s movement and other major social changes that impact the same demographics simply never happened. Being in rural areas they have believed they could escape notice.

Being big, they can get away with it. In releasing the report to news outlets throughout the region, it was depressing talking to some of the small town weeklies and other news outlets that allegedly cover the news in these rural communities. They basically didn’t want “to rock the boat.” Many pleaded that the impact of reporting the story, even when obvious and well-known to some of them, because it was the equivalent of economic suicide: they needed the ads from the cooperatives and their leadership. We had noticed this group-think and stifling collaboration earlier when we had sent letters to all of the cooperatives and, almost defying all statistical or random possibility, we received not one single response, even a refusal to provide information or a brushoff or a go-fly-a-kite, just total silence.

Meeting with various cooperative experts and advocates while I was in Madison, Wisconsin recently, it was reassuring to find out that according to inside sources the report was on the agenda at the recent meetings of the board of the National Rural Electric Cooperative Association. One advocate speculated that there was likely not a manager of an electric cooperative in the country that had not received a copy of the report. He also believed it was likely mandatory reading increasingly for elected members of cooperative boards. All that was good to hear. They may be hiding with their heads down, but they hear the bullets whizzing by them increasingly.

If I believed in some kind of by-the-by, trickledown theory and practice of change, then I might just say, “our work is done,” and wait to see whether there might be some gradual reforms or some jump of the needle indicating more diverse representation in coming cooperative elections.

That’s not what we believe though, so to keep the heat on we are meeting today in New Orleans with our ACORN International researchers to see what the IRS 990s for the cooperative say about what these folks in the cooperative bunkers are paying themselves for directors’ fees. So far what we’re seeing isn’t pretty, but it as the cop-shows on television say, it does establish an additional motive for this kind of anti-democratic behavior which keeps the “white, right, and ready to fight” crowd running the cooperatives without real diversity or democracy, just as they have for over 75 years.

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