GUEST COMMENTARY by MIKE WILLIAMS
Texas Electric Cooperatives
Typically, electric cooperatives in Texas hum along doing their members’ business without incident. These co-ops normally do not attract the spotlight, but one cooperative has been regularly making the headlines.
Its problems made good copy because of irregularities in governance and transparency practices. But beyond that, the story got a lot of attention because nonprofit, privately owned electric cooperatives have a reputation as the guys in white hats.
This co-op’s problems prompted member involvement, resulting in positive changes in the way the members’ business is conducted.
Generally, co-ops operate as democratic and open organizations. Existing laws and practices ensure compensation information for directors and key employees is available to the public. Annual audits are performed at every co-op and shared with members. Co-op financial records are available to any member.
Any co-op member can attend a board meeting and discuss any issue relevant to the co-op. Any member can get on the ballot by petition or by showing up at a district meeting. And co-ops hold annual meetings where votes are cast and counted and board members are elected — and where it is not uncommon for incumbent directors to lose elections and be replaced by challengers. Most would say that makes for a solid model of democracy and transparency.
Last December, co-ops delivered to state Sen. Troy Fraser and Rep. Patrick Rose proposals to prevent a recurrence of the problems at the old Pedernales. Co-ops in Texas believed it was appropriate to offer constructive solutions.
The bills filed by Fraser and Rose are intended to ensure that the problems at one system will not happen at any cooperative in the future. And that’s a good thing. But their bills contain some provisions with the potential to harm the members of electric co-ops.
For example, the bills do not tie a request for co-op records to the member’s interest in the co-op. Instead, they only require that the member state any purpose that is “reasonably related” to the business of the co-op. This would allow a member to obtain access to information for the member’s personal or business gain. That would not be a prudent change in the minds of most co-op members.
Another example is membership lists, which are considered valuable business assets and, therefore, treated as proprietary. The bills do not protect lists of co-op members from being handed over to non-member third parties such as out-of-state venture capitalists interested in purchasing co-ops. We believe that few co-op members would support such a change.
The bills would treat electric co-ops as if we are governmental entities imposing Government Code procedural requirements on private cooperative corporations. As private corporations, co-ops pay property taxes and other state and local taxes and are therefore comparable to other private nonprofit and member-owned organizations that are not the focus of the legislation. The proposal is a major departure from how such entities are currently treated under Texas law.
A Feb. 20 Austin American-Statesman editorial spoke favorably of the right of appeal to the Public Utility Commission concerning governance and transparency issues and stated that such a process would be far less expensive than a lawsuit. We disagree. The PUC has no expertise in these issues and a PUC proceeding would likely become a contested case guaranteeing extensive litigation and a heyday for lawyers and consultants.
We believe a more appropriate safeguard is to establish a procedure at the Consumer Protection Division of the Attorney General’s Office where cooperative members can file complaints about governance and transparency issues and seek resolution without having to hire an attorney and go to court. The Attorney General’s Office actually has expertise in such matters and the Consumer Protection Division offers a far more consumer-friendly place for such resolution. If this safeguard had been in effect, the protracted and expensive member lawsuit at Pedernales could have been avoided.
Co-ops support reasonable proposals to ensure that the problems at PEC could not happen in the future. But such proposals must be appropriate for co-ops. They must protect co-op members and not repackage statutes intended for governmental entities.
More than 3 million Texans receive their electricity from cooperatives that have successfully served their areas with integrity and commitment for more than 70 years. During these turbulent times of volatile energy prices and changing markets co-ops remain remarkably popular with their members. Their commitment to reliable and reasonably priced energy service is no accident.
Let’s preserve that tradition.
MIKE WILLIAMS is chief executive officer of Texas Electric Cooperatives.Email | Print