Former CEO Dwight Brown did a number on the Cobb Electric Membership Corporation (EMC).
Cobb EMC serves around 175,000 member-owners just outside of Atlanta, Ga., and is one of 900 member-owned electric cooperatives in the United States. From the late 1990s on, the co-op’s members lost nearly $400 million dollars to Brown’s for-profit Cobb Energy, a shell entity Brown engineered to drain money from the cooperative. Over a 15 year span, Brown personally pocketed more than $21 million through self-dealing and conspiring with other business entities, including a proposed $2 billion coal-fired power plant that would’ve raised members’ electric rates by 10 to 20 percent in its first year of operation alone. Brown was indicted on more than 30 charges including theft and racketeering in 2011; he is still awaiting trial.
With the release of ILSR’s report, “Re-Member-ing the Electric Cooperative,” we released three podcasts featuring great stories of electric cooperatives that are promoting renewable energy and engaging their members. This is the first podcast.
Brown and Cobb EMC’s story is more than a story of greed. It remains a stark reminder of just how much can go wrong when a member-owners of an electric cooperative fail to participate in the very electric utility they own and regulate. (For the most part, states do not regulate electric cooperatives.)
Mark Hackett, president of member-driven Cobb EMC Forum, joins John Farrell this week to talk about how an engaged membership continues to be essential to defending the vitality of a locally owned electric company.
Hackett (pictured above) became involved only after Brown’s infamy hit the newspapers. Cooperative members were angry. Some filed a lawsuit against Cobb EMC, eventually winning a settlement that made Brown step down in 2011, as well as setting a course for board elections. Other members formed reform groups. One of them, Take Back Cobb EMC, was cold-calling for support to elect a new board of directors. They hoped a new board would withdraw from participation in the Washington Plant coal project. They ended up calling Hackett, who was newly retired from a career in the electric utility industry.
“The coal plant was an economic boondoggle,” says Hackett, who used his expertise in baseload power to help define the economics of the power plant to board members and other cooperative members.
Above: Auditors tallied almost $400 million in costs to the Cobb Electric Membership Corporation from former CEO Dwight Brown’s Cobb Energy.
A new board was elected. The new members backed out of the Washington Plant. Its purpose solved, Take Back Cobb EMC and other member groups dissolved into what is now the Cobb EMC Forum.
“Our challenge and mission is to try to encourage member involvement in Cobb EMC so that we never revisit the sins of the past,” says Hackett. “And boy it is a challenge.”
Minding the Members
Much has been accomplished by member activism, but as members recede into their private lives, the board has recently made moves to undermine member control.
Last year, the board of directors opened all board meetings to any cooperative member. However, committee meetings, where controversial issues such as power supply and finances are discussed and rehashed, remained closed off. Hackett notes that these committees return to the board with proposals that have been sanitized of meaningful discussion, preventing members from understanding the decisions of the board.
Organized by Cobb EMC Forum, members proposed a bylaw change that if a committee meeting had a quorum of board members (a typical practice), then members could not be prohibited from attending. Members overwhelmingly approved the new bylaw, despite a board recommendation against transparency, along with three other bylaw changes that members worked on with the board.
But in December, the tides turned. The board proposed to change the signature requirement for bylaw proposals from 35 to 850 members, effectively hamstringing the cooperative’s Members’ Bill of Rights that guarantees the right to propose bylaws.
“You pretty much have to have it as your full time job to go and get 850 signatures,” says Hackett. Before the measure was finalized, Hackett quickly sponsored a bylaw change proposal (with 35 signatures) to reinstate the 35 signature requirement.
Hackett’s timely move will be voted on at the next annual membership meeting. But the board hasn’t taken the issue lying down, introducing a measure to change the threshold of members needed to pass a bylaw change from a simple majority to two-thirds. The board cites the need to combat “the same small number of members to attempt changes to the bylaws every year,” although only four changes have been adopted in the past three years (three with board approval).
“I do know it does take member involvement and groups like ours to drum up the members to make sure things don’t go south,” says Hackett. “it’s too easy for a board to forget who elected them.”
For more information on the challenges of maintaining member control (and other issues), see ILSR’s report Re-Membering the Electric Cooperative, released in March 2016.
This is the 31st edition of Local Energy Rules, an ILSR podcast with Director of Democratic Energy John Farrell that shares powerful stories of successful local renewable energy and exposes the policy and practical barriers to its expansion. Other than his immediate family, the audience is primarily researchers, grassroots organizers, and grasstops policy wonks who want vivid examples of how local renewable energy can power local economies.