Fairness

Issues of fairness come up again and again at electric co-ops across the country, from excessive compensation to nepotism and lack of diversity to outright corruption.

Excessive Compensation

• Member-owners have documented a practice called "per diem mining", where board meetings and board committee meetings are spread over many days. Since board members often receive a per diem amount for each day they attend a meeting, this results in board members being able to drastically increase their own compensation. At Tri-County Electric Co-op in central South Carolina, member-owners overthrew the board after a leading SC newspaper published information about excessive compensation, specifically “a part-time board that had paid itself more than three times the national average, including health insurance plans and expensive perks.” (The State, August 18, 2018.)

• Most non-profit boards are all volunteer, but electric co-ops generally compensate their boards from a few thousand dollars a year to more than $50,000. Member-owners at Cobb EMC in Georgia did an analysis of their co-op board members and executives compared to co-ops of a similar size nationally and other co-ops in Georgia based on 2014 990 tax forms. They found that their board members were compensated around $50,000/year which was 189% of peer electric co-op boards and their CEO was compensated 234% of peer co-op CEOs.

Nepotism and Lack of Representation and Diversity

• At Powell Valley Electric Co-op in Tennessee, members have found that many long-serving board members pass on board positions to their relatives and friends by getting them appointed to open seats, then they are incumbents when they are up for election.

• At Black Warrior EMC in western Alabama, the co-op serves an area that has a majority of people of color, but there are only a few co-op staff that are not white.  Members have seen similar patterns across the country, especially in the South.

Corruption and Embezzlement

• Member-owners of dozens of co-ops have uncovered questionable payments to spouses of staff members and former directors, million dollar CEO bonuses, and outright theft of co-op funds by staff and directors.

• At Choctaw Electric Co-op in Oklahoma member-owners discovered: the CEO was using co-op equipment to do work on his personal property without paying for the use of the equipment (until he was caught); employees were putting sheds for their personal use on co-op credit cards; there was a no-show employee, who was collecting a salary in exchange for not blowing the whistle on the CEO; and the CEO awarded himself a million dollar bonus while co-op member-owners' rates went up to pay for it.  When he corruption was brought to light and member-owners organized a special member meeting to recall the board members, the board (being careful to let the lawyers lead and keep quorum) resigned one-by-one and appointed their own successors, arguing that nullified the petition and no special meeting would be called.  We Own It made a film about the Choctaw member-owners' campaign to finally elect their own board.

• At Cobb EMC in Georgia, member-owners stopped a $2B coal plant that was a bad deal for members and found that the CEO and board members were basically marking up and selling co-op services back to the co-op for a 12% markup!  You can learn more about the ongoing work there at Cobb EMC Forum, a local member-owner group.

The Future of Energy

Renewable energy is now the lowest cost option for electric power generation (source)

A 2018 report from Rocky Mountain Institute showed that Tri-State, a generation and transmission cooperative of 42 electric co-ops and public power districts in Colorado, Nebraska, New Mexico, and Wyoming, could save at least $600M by 2030 and reduce their risk by using their coal plants less and investing in more renewable energy.

Xcel, an investor-owned and profit-driven utility that competes with Tri-State, just committed to 100% carbon free electricity by 2050. Making a similar commitment would provide an opportunity for electric co-ops to show moral leadership on our climate crisis at the same time that they are lowering rates and driving local economic development with local renewable generation and massive energy efficiency investments.

Examples of electric co-op leadership on clean energy:

• Great River Energy: a generation and transmission co-op serving 28 electric co-ops in Minnesota committed to 50% renewable energy by 2030. In their fact sheet, they say: “Renewable energy, particularly wind, is Great River Energy’s lowest-cost option for new generation resources. This goal does not change Great River Energy’s mandate to provide affordable and reliable energy to its member-owner cooperatives. Great River Energy’s average wholesale rates will remain flat in 2019 with projected increases below the rate of inflation for the next decade.”

• Kit Carson Electric in NM: in 2016, they were able to buy themselves out of their G&T contract with Tri-State for $37M in partnership with a renewable energy company, Guzman Energy, and they are set to be 100% solar powered during the summer in 2022. This deal is also projected to save Kit Carson members $30M+ in their contract with Guzman over staying with Tri-State, in addition to increased local economic development. More on this from San Juan Citizens Alliance.

• Farmers’ Electric in IA: They are a small co-op that is not a member of a G&T, so they have incentive to invest in solar energy to have local power supply and reduce their peak demand. They have a number of solar programs and one of the highest amounts of solar energy per meter of utilities in the US with more than 20% of their power coming from solar annually!

• Central Iowa Power Co-op: CIPCO is a G&T serving 13 electric co-ops in Iowa that gets a significant amount of power from wind energy and claims to be almost 60% carbon free in their energy production. In December 2018, CIPCO announced a 100MW solar project, which will be the largest solar project to date in Iowa!

• Ouachita Electric Co-op in Arkansas: Ouachita is investing millions in energy efficiency upgrades of member-owner dwellings, creating an on-bill payment opportunity for solar, offering community solar, and more.  Members at OEC paved the way for these programs when they elected reform board members who hired a new CEO with a mandate to serve members. As Appalachian Voices notes in a recent blog, “It seems counterproductive; why would any utility supplier want to sell energy at a lower price and decrease their profit? ‘Well,’ says Cayce [OEC’s CEO], ‘We’re in the business of serving our members, not selling electricity.’”