The JOHNSON CONSULTING Report
BREAKING NEWS: (2008)
Electric co-ops in Texas going under the microscope
Austin TX (January 30) -- Texas Lt. Gov. David Dewhurst has released his Interim Committee Charges to the 80th Legislature, and the state's electric cooperatives are at the top of the list for new legislative scrutiny.
The first item listed, for the Senate Business & Commerce Committee, reads as follows: "Study the current governance structure of electric cooperatives. Make recommendations for any legislative changes required to adequately protect consumers, increase reliability, and respond to consumer complaints."
Hearings, including deposed testimony under the auspices of the Senate committee, are expected to begin by mid-year.
Our sources say items of interest will include:
(1) Making electric co-ops subject to the Texas Open Meetings and Texas Open Records Acts;
(2) Requiring electric co-ops to refund capital credits based on margins or to provide detailed explanations for the failure to do so;
(3) Requiring electric co-ops to participate in competitive electric markets;
(4) Requiring electric co-ops to justify compensation and perquisites provided to directors, including meeting/work records and other documentation;
(5) Establishing standards for electric co-op expenses, includng paying for staff and director/spouse travel and other expenses;
(6) Requiring electric co-ops to conform to the same standards applicable to the Texas County Purchasing Act for awarding contracts;
(7) Establishing election standards for directors, including tightening provisions for non-election appointments and gerrymandering;
(8) Establishing uniform standards for elections, including prohibiting voting prior to the annual meeting process where comments from candidates might be heard;
(9) Setting investment standards involving for-profit subsidiaries, including loss liability and co-mingled expenses, and reviewing investment losses in such subsidiaries, including such activities as software services and 220 mHz telecommunications systems;
(10) Establishing compliance standards to PUC rules and state statutes, including refunds to members applicable to deposits and the Power Cost Recovery Factor (PCRF);
(11) Requiring electric co-ops to conform to the Generally Accepted Accounting Standards (GAAP)as specified in Chapter 66 of the Public Utility Regulatory Act.
Adding fuel to the fire, the Senate chairman of the Business & Commerce Committee which has been charged with investigating the issue is Troy Frasier, who happens to live in Lakeway, Texas and is a member of Pedernales Electric Cooperative (PEC), based in Johnson City, which has come under fire for management practices and expenditures which have been reported in the Austin American-Statesman in numerous articles over the past several months. In addition, member unrest also has surfaced in Hilco Electric Cooperative, based in Itasca, involving allegations which include (a) gerrymandering to preclude a member from becoming a candidate in a director election, (b) an orchestrated director resignation and non-election appointment, and (c) withholding financial information from members.
Member websites pertaining to these two co-ops are:
Contact:
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