Cobb EMC in 2012 – Progress Being Made But Big Challenges Remain

Coming up on Saturday, September 15th is a huge event for the Membership of Cobb EMC, the first Annual Membership meeting not mandated by court order since 2007. A major re-write of the bylaws is being proposed by the new Board of Directors and two additional modifications are being proposed by one of your fellow members, Paul Chellis.

July 26th Town Hall Meeting Recap

Leading up to the Annual Membership meeting, The Cobb EMC Board held a Town Hall meeting on July 26 of this year. Starting off the meeting was a presentation by Board Chairman Ed Crowell with input also being provided by several Board members. The floor was then opened to Member questions and several well reasoned and pertinent questions were raised. Some key takeaways from the Town Hall meeting for me were:

  • The Board was working on a bylaw re-write to be presented for vote at the upcoming annual meeting to include provisions for open board meetings, term limits, and mail in voting,
  • Work was forging ahead on the Request for Proposals (RFP) for capacity and energy and in excess of 70 viable bids have been received. Economics appear very favorable and justify the recent decision by our new Board of Directors to withdraw from the expensive boondoggle known as Plant Washington (aka Power4Georgians),
  • Cobb EMC expects that the aforementioned RFP will enable it to cut its ties to Energy Consulting Group (ECG), as well as Cooperative Energy Incorporated (CEI) who are currently providing Cobb EMC with Energy Management Services on a “no bid” basis, and
  • Cobb EMC is cutting its formerly expensive and questionable relationship with J. W. Rayder and allowing his contract reimbursing him up to $30,000/month to expire.

The overall tone of the meeting was open and congenial and yours truly was very encouraged that the new Board of Directors has made real progress in their inaugural year. The Town Hall meeting itself was an excellent example of our new Board of Directors reaching out to the Membership.

Re-write of the Bylaws and EMC Member Amendments – Vote Yes

The Town Hall meeting notwithstanding, there are several things that are unsettling. The board has performed what is essentially a complete re-write of the bylaws. The schedule upon which they have undertaken this has left no room for a Member comment period, so we are left with the choice of an up or down vote on the complete package on September 15th. The bylaws have only been recently made available so there has really been little time for anyone to review the content in detail. My read of the new bylaws is that we should vote for them primarily because of the mail-in voting and open meeting provisions. However, as I stated above, one of your fellow EMC members, Paul Chellis, has submitted two additional amendments to the bylaws that I strongly urge everyone to vote for.

One is a modification to the Board proposed 4 term (or 12 year) limit. Paul’s amendment calls for a three term (or 9 year) limit, with the caveat that if a former Director leaves for a term, he or she may then run in the following election three years later. I believe a three term limit is more reasonable particularly when we think back on the result of an entrenched board and how difficult it has been for Members to regain control of our EMC. The primary argument that the Director job is “too difficult to learn” to impose a 9 year limit is a little silly when one compares their job to that of the President of the United States. Last I checked that job has an eight year limit.
Paul’s second amendment provides for something many of us have complained about: the ability to give a written proxy to another Member if you cannot make a voting meeting. Paul’s amendment allows you to do that. It also contains a protection against the EMC collecting proxies to entrench incumbent Directors by preventing employees or directors of the EMC from receiving a proxy. Mr. Crowell, our Chairman, has gone on record saying that proxies impose a risk of a special interest group collecting proxies to swing an election. I believe this is disingenuous given that the Board’s draft of the bylaws already contains a provision for proxies by commercial and industrial customers (without any restriction on those proxies being held and voted by incumbent Directors). The Board has also contended that proxies aren’t necessary because of the mail in voting provision in the new bylaws. This argument also falls short because the new bylaws only specify mail in voting for Director elections. The new bylaws still provide broad leeway for other matters to be considered only in the context of a Member Meeting where one must attend to vote. We need proxies to assure our voice is heard in matters concerning our EMC.

Other Concerns

The last several years saw significant erosion of our rights to participate in decisions made at our Member owned EMC. The new Board of Directors that we fought so hard to elect has made real progress to restore some of those rights, but still they need to remember why they were elected. Bylaw re-writes, even with some good enhancements, should have significant opportunity for Member participation and comment and this has definitely not occurred. While I am recommending that we approve the new bylaws, the new bylaws do have several flaws that will need to be addressed over time (and these have only been identified with a very short review time; I am not aware of any Member that has been able to make a detailed comparison to the previous bylaws in the time we have had thus far). For one, the open meetings provision is very watered down when compared to the one approved at the Pedernales Electric Cooperative in Texas after they went through a series of problems very similar to our own. In a story that will sound familiar to Cobb EMC Members, Pedernales General Manager Bennie Fuelberg was convicted of third- degree felony theft of co-op funds, money laundering and misappropriation of fiduciary

property. In light of a similar fiasco at our EMC, many Members feel that the Pedernales bylaw revisions should have been more heartily endorsed by our new Board of Directors. A second flaw in the re-write concerns a provision hastily included in the February 2010 set of bylaw changes made by the old Board of Directors while they were in the midst of damage control and the appeals battle with the plaintiffs in the derivative litigation lawsuit. This change required a 70 to 100 day lead time to submit proposed changes to bylaws prior to an annual meeting. Since 1938, Members had been able to make proposals from the floor at the Annual Member meeting that would be voted on immediately. According to the plaintiff’s legal filings, this right is part of the enabling legislation for EMCs. The new re-write extends the restrictions on Member proposals even further, requiring a full 100 days lead time and 35 Member signatures on any Member sponsored bylaw change. While Members may gain the floor and request a vote on a Member proposal, no such vote is binding unless the proposal is submitted with the appropriate hundred day lead time. These provisions will make it significantly more difficult to make further progress at our EMC. Let’s vote yes on the new bylaws, and definitely vote yes on the Paul Chellis amendments. But we need to maintain vigilance and be aware that we need some significant additional bylaw changes to be ratified at the 2013 Member meeting. Mark A. Hackett A Cobb EMC Member

We’re Still Here!

 Cobb EMC elections are behind us, but we must stay vigilant and involved to ensure that the reforms we fought so hard for actually happen. Take Back Cobb EMC was one of the catalysts that ushered in new leadership promising good governance and democracy at Cobb EMC, and we’re proud to announce that we’ll be leading the member-based effort to enact a strong and thorough forensic audit, open board meetings, and other crucial reforms. We are confident the board is moving in the right direction; we’ll be following it and keeping members apprised when we need to take action.

The new board has already taken steps to move past the days of Dwight Brown. It is reviewing forensic audit firms with a view toward engaging one in the next couple months. However, the board has been unable to agree on key reforms like open meetings and term limits. We’ll let you know about opportunities to weigh in. For example, Cobb EMC’s annual meeting is in September and we’ll need to attend the meeting to make sure we keep up our end of the bargain and remain responsible member-owners of Cobb EMC.

Members fought tirelessly to secure the election of new and accountable leadership, but we cannot step aside. Our job isn’t finished.  We must remain committed, vigilant, and ready to take action. After all, what use is transparency if no one’s watching?

What’s next? The Forensic Audit

The new board is working hard to ensure that a thorough forensic audit happens, but we need to make sure the public is aware of not only what a forensic audit is, but what needs to be included in the audit. The indictment against Dwight Brown alleges that significant amounts of money left Cobb EMC illegally under his watch, and the only way to track every penny is through a robust and comprehensive forensic audit that not only focuses on where the money went, but who received it.

Some areas that we believe should be included in the audit:

  • The creation, financing, and management of Cobb Energy
  • Cobb EMC’s relationship with Power4Georgians and Plant Washington, including land deals and ex-Cobb-Energy-VP Dean Alford
  • Cobb EMC’s relationship with Energy Consulting group and its leader, Anis Sherali
  • Cobb EMC’s relationship with J.W. Rayder, including his $30,000 a month to lead the Gas South management committee plus $40,000 a month to consult
  • Cobb Energy’s various (now liquidated) subsidiaries
  • Cobb EMC’s relationship with Eagle Energy Partners

If you’re interested in learning more about the forensic audit process, especially how it relates to utility co-ops, please feel free to take a look at the audit (LINK) conducted at Pedernales Electric Cooperative near Austin, Texas. Over the last decade, PEC experienced similar issues to those we’ve faced at Cobb EMC. After electing a new board, it brought in Navigant, an auditing firm that helped secure the answers that the new board and PEC members needed and deserved.

Stay Involved!

We need to keep EMC members informed, and make sure our new board members know we’re behind them. Now is the time for us to share our thoughts and concerns with others. A great way to do that is to submit Letters to the Editor at the Marietta Daily Journal and other local newspapers. If you’d like to submit a Letter to the Editor, an opinion piece to a local newspaper, or just to get involved with TBCE, please contact Joel at joel@takebackcobbemc.com

Let’s get to work!