PEC may change bylaws this fall

BY TOM BOWER • Special to The Daily Tribune

SAN MARCOS - The winds of change are blowing at the embattled Pedernales Electric Cooperative, where a spokesman said Tuesday proposed revisions to the utility’s bylaws could be unveiled before Thanksgiving.

The co-op endured heated criticism over the summer regarding uncommonly high salaries paid to board members, self-perpetuating board election practices and limited access to co-op business information.

“We want to have the bylaw revisions out before Thanksgiving,” said co-op spokesman Bill Cunningham in a phone interview from his San Marcos office.

The announcement comes less than two weeks after the cooperative held three days of member forums to solicit feedback on more than a dozen ongoing concerns regarding co-op business practices. Board policies under member scrutiny include the approval of board compensation and the rules for the proxy-based system of electing board members.

Also under scrutiny is the cooperative’s wholly-owned for-profit subsidiary Envision Software Corp., which posted net operating losses totaling $22 million over the past three years, according to the co-op’s consolidated financial statement for the year ending last Dec. 31.

The announcement also comes on the heels of another request for information about the co-op from state Sen. Troy Fraser, R-Horseshoe Bay. Fraser is chairman of the Senate Business and Commerce Committee, which oversees the state’s electric power industry.

Fraser said he put a call into co-op General Manager Bennie Fuelberg, Oct. 1, seeking five pieces of information that he thought would take about an hour to produce. More than half a day later, Fraser said he received a call from Austin attorney Walter Demond, who is one of the co-op’s two outside general counsel lawyers.

“What I intended to do was to make a very simple request for some information that could be pulled together in an hour’s time. I didn’t get a call back from Bennie, but at 4 p.m. I got a call from the co-op’s outside lawyer, Walter Demond,” Fraser recalled.

“That is like killing a mosquito with a sledgehammer. You’ve got some lawyer they’ve hired for $500 or $600 an hour calling me back, when you could have told a clerk to look up the information,” the senator added.

Didn’t get answers

Making matters worse, Fraser said Demond didn’t have any answers then, nor did he have any answers when Demond called Fraser back later that night.

Fraser recalled that he ended the phone call by reminding Demond that the Senate Business and Commerce Committee will be conducting hearings to look into the concerns voiced by PEC members. He added the committee has the power to issue subpoenas for co-op records and witness testimony.

“I said, ‘I want to make this clear - and don’t take this as a threat - but my committee has subpoena powers,’” Fraser recalled.

Fraser added he told Demond he was aware of a pending lawsuit, filed by a handful of PEC members, accusing the cooperative board of breach of fiduciary duty and breach of contract, and that he did not intend to ask for information that was not already available to the public.

“I told him, ‘I don’t want you to use this lawsuit as a shield to deny me or the public information that we should have,’” Fraser recalled.

Fraser said he asked for:

• A list of the lobbyists hired by the co-op and their fees.

• The names of the advertising firms hired by the co-op and the contract amounts they are being paid, as well as the purpose for the ads.

• Whether Envision Software Co. paid any salary to Fuelberg or PEC Board Chairman William Walter “Bud” Burnett, who are both listed as officers of the company.

• A list of Envision’s customers.

• A copy of all of the comments submitted to the cooperative during the nine member forums held Sept. 25-27.

“These things I’m asking for, I think the public has a right to know,” Fraser said.

“I think the members want to look at the books,” the senator added, referring to net operating losses totaling $22 million reported by Envision over the past three years.

Fraser, who has some experience in accounting, said he offered to go to Pedernales’ Johnson City headquarters and privately look at Envision’s accounting ledgers, and report back to his constituents whether ownership of the subsidiary is in the best interest of the cooperative’s members.

“We are certainly doing everything in our power to get him the information that he has requested,” Cunningham said, denying the cooperative is dragging its feet.

Cunningham added that it is taking time to compile the comments submitted by members.

Anne Harvey, information services supervisor for the co-op, said there were 450 members who attended the forums, and that approximately 400 of them submitted written comments.

Fuelberg was out of town and unavailable for comment.

According to information on the cooperative’s Web site, Pedernales became a client utility of Envision in 1986, when the co-op began using Envision’s software to manage its customer database. The software not only handles the bills that are mailed out to members, it also protects that information from being accessed by anyone outside of the co-op.

Pedernales became a 50 percent owner of Envision in 1990, along with several other Western states utilities. In 1995, it became a 75 percent owner, and in 2002 the co-op purchased the rest of the company to become sole owner.

Info delivered Monday?

Harvey said the co-op is still compiling the information that will be provided to Fraser by next Monday at the latest, and declined to tell The Daily Tribune how many paying clients Envision currently has. She also declined to say how many are employed by the company, based in Albuquerque, N.M., but she did reiterate earlier published statements that Fuelberg and Burnett receive no salary from Envision.

Harvey said the Pedernales Co-op buys television and newspaper ads to promote its energy conservation program and its renewable energy program, as well as to publicize co-op events such as the recent member forums and the annual co-op meeting each June. But she said the co-op does not contract with an advertising firm for the service, opting instead to handle the publicity in-house.

Citing the senator’s pending request for information, she declined to say how much the co-op board has budgeted for advertising this year.

Co-op leaders will also have to explain to Fraser why they have hired a former Senate colleague to serve as a lobbyist.

According to records filed with the Texas Ethics Commission, PEC has hired lobbyist David Sibley for an amount less than $10,000 to provide services between Sept. 10 and Dec. 31 of this year. When he was a state senator, Sibley served as chairman of the Senate Business and Commerce Committee, and he was the author of Senate Bill 7 in 1997, which resulted in the deregulation of the state’s electric power industry effective in 1999.

“When I found out they hired him, I went ballistic. They’re using my ratepayer dollars to hire a lobbyist to lobby me. And I’ve heard that the PEC is continuing to try to hire other lobbyists,” Fraser said.

As a lobbyist for a wide variety of business and industrial firms, Sibley currently has 45 clients, according to the Ethics Commission, including four other electric utilities and the tort reform group Texans for Lawsuit Reform.

Since the member forums in late September, Fraser said his offices have received calls from constituents complaining the forums were a sham.

“Our phones have been ringing off the wall from people who were infuriated by what went on at those meetings. The people are not upset with the Pedernales employees. They’re upset with the cooperative’s upper management. They complained that they would ask a question, and then they would hear, ‘Oh, I don’t know the answer to that. Would you like a cookie?’ ”

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PEC may change bylaws this fall