EMC Transparency: Time to Restore Fairness

The following op-ed, written by Dan Davis, was sent along to me for publication here at Peach Pundit. Mr. Davis and his wife, Barb, have been member-owners of Cobb EMC for 13 years.

Nearly 5 million Georgians get their electricity from EMCs – electric membership corporations. According to their trade association, Georgia Electric Membership Corporation, EMCs “are consumer-owned and consumer-governed, not-for-profit cooperatives whose purpose is to ensure safe, reliable and affordable delivery of electricity to homes and businesses.”

Imagine being a business owner who can’t attend his or her own executive meetings or review the company books and records. That’s the reality for the millions of customer-owners (or “members”) served by Georgia’s 42 EMCs. Although members can participate in EMC matters by attending annual meetings and electing the board of directors that steers their EMC, participation ends there.

EMC boards are not required to open their meetings to the public, even when critical decisions are to be made about how to spend millions of member dollars. Accessibility is no better after decisions are made. Current Georgia law outlines a process by which members may access an EMC’s books and records, but the law is replete with so many exceptions that EMCs can force a member to go to court just to gain that access. This poses an undue hardship on EMC members.

In Georgia, all electric utility customers are considered “captive.” We cannot choose our electricity provider. Since electric rates can’t be controlled by the competition resulting from consumer choice, the Georgia Public Service Commission (PSC) regulates rates to protect the consumer – unless that consumer’s power is provided by an EMC. Because they are supposedly member-owned, current Georgia Law considers EMCs to be “self-regulating”, and exempts them from PSC rate regulation.

EMC member-owners are also captive investors. While shareholders in investor-owned utilities like Georgia Power choose to own stock, EMC members become investors by buying a home or locating a business where the meter will be owned by an EMC, then quickly find that their member-owner status gives them little real ability to govern their cooperative.

How can we ensure that EMC members have the meaningful, timely access to EMC meetings, books and records required to make EMCs truly self-regulating? By making some straightforward amendments to Georgia law.

Last year, Rep. Wendell Willard introduced HB 316 to require EMC board meetings to comply with Georgia’s Open Meetings law. The bill was sent to the House Energy, Utilities, and Telecommunications Committee chaired by Rep. Don Parsons (R-Marietta). Though it had a hearing, the bill never made it to a vote in the subcommittee.

I believe the full House and Senate should be given an opportunity to vote on the bill. Among the changes Georgia’s legislators should make to the law governing EMCs, to ensure openness, fairness and transparency:

  • Make books and records related to EMC business available for examination and reproduction by members. Copying costs should be reasonable.
  • Require a three-year retention period for written records of EMC meetings. When the board needs to discuss trade secret information or sensitive personnel matters, closed-door executive sessions should be allowed. But all final decisions should be rendered at meetings open to members.
  • Require an EMC to respond promptly to a member’s request for information. If the information is not available immediately or not subject to inspection, require the EMC to provide a date when it will be ready and to give a reason to support why any “sensitive” information has been redacted.
  • Allow members access to an up-to-date membership list, a crucial resource for any EMC member who decides to run for a position on the EMC’s board.
  • Require EMCs to provide comprehensive information regarding upcoming board elections in bill inserts at least twice prior to board nominations.

The July 2011 indictment of former Cobb EMC CEO Dwight Brown on 35 counts of racketeering, theft and witness intimidation in connection with his service at Cobb EMC serves as a cautionary tale regarding the lack of transparency this proposed legislation seeks to address. Brown hired a for-profit company he created to operate Cobb EMC, at a markup that reached 11 percent. Many details regarding this arrangement came to light only because some Cobb EMC members filed suit in 2007 to compel the EMC to turn over the information.

Something is wrong when EMC members must resort to filing a lawsuit just to access information critical to determining whether an EMC and its board are acting in the best interests of its members. We’ve seen what can go wrong, so let’s fix it to prevent possible fraud and abuse in the future. Cobb EMC is only one of 42 EMCs serving over half of Georgia’s residents. It is the responsibility of Georgia’s legislators to do what’s necessary to protect hard-working consumers around the state – including the on-the-ground employees of cooperatives working to keep the lights on from Blue Ridge to Cairo, who themselves are EMC members.

Fairness, transparency and accountability aren’t too much to ask. As we’ve seen with Cobb EMC, keeping the lights on is no guarantee that EMC members aren’t left in the dark.

2 comments

  1. @Solar1SE says:

    Hurray for PeachPundit! It takes less than 1 minute to call your legislator’s office and ask for their support on this bill or a similar one in the senate. If it got a hearing, chances are no one showed up except the EMC lobbyists! We can’t blame anyone else for bad government when we don’t participate. http://www.legis.ga.gov

  2. log224 says:

    Transparency and accountability can be legislated. Fairness cannot.

    The fact that so many public companies who are under various federal, state, and shareholder-enforced reporting and transparency requirements can defraud the public for years before they are exposed renders any kind of “truth” legislation for privately operated companies rather moot.

    If an EMC has a weak board and strong management, especially a strong CEO who is given carte-blanche, the possibility for fraud and abuse exists.

    I am not certain that sunshine laws can effectively reduce this possibility; only maybe speed the discovery once it’s strongly suspected. I think the most effective method is for upright individuals to run for their EMC boards, and use that mechanism to keep the utilities accountable to their members.

    I’ve been a member of Flint EMC for 20 years and I think they are one of the best run EMC’s in the state.

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