Interim general manager Debbie Cole responded to HILCO member concerns in a telephone interview with the Daily Light on Friday.
Several members have raised questions about board expenditures and access to information about the electric cooperative, which is a private, not-for-profit, member-based organization that is based in Itasca and serves five counties.
The members have been circulating a petition asking for a special meeting in July to consider recalling four of the board’s seven directors. Signatures also are being gathered on a Web site, www.rescuehilco.com.
At least 1,600 signatures must be gathered and members notified by June 15 in order to hold the meeting July 21.
Originally, two of the directors under fire from the membership had said they would speak with the Daily Light; however, a decision was subsequently made to let Cole speak on the issues.
Much of the members’ concerns center on the lack of access to information, and they have expressed their frustration that, as a private entity, HILCO is not subject to either the Open Records or Open Meetings acts.
By the directors’ decision, the board meetings are not open to the membership or to the public and media. This is not part of the entity’s by-laws - which don’t address the issue - but reflects a decision by the board, which also decided at some point that members are not allowed to have copies or to make copies of documents such as board members’ expense reports.
The members told the Daily Light they have been told they may only hand-write information down from any document they review, and they said they’ve been told they will be charged $50 an hour to ask questions about any of the documentation they want to see.
In response to these concerns, Cole said she didn’t know when the board policies relating to meetings and copies were established. She said it has “just not been general practice” to have open board meetings and that she’s not aware of any cooperative that does so.
As the lead staff member, Cole said she is allowed in the board meetings and that other staff members are allowed in as needed for a presentation.
As far as documents go, she said members are “more than welcome to come in and review the records,” and adds, “We’ve never charged to review the records.”
She acknowledges the cooperative doesn’t allow copies to be made nor will it provide members with copies but says they can write down any information they want.
She also acknowledges a charge can be levied for any staff member’s time to answer questions, but said she doesn’t know where the $50 cost per hour figure came from.
“I’ve never charged to answer a question,” she said, “and to my knowledge, no one has ever been charged for a question to be answered.
“If they’re asking a question for their bill or account, certainly there is no charge,” she said. “If you’re talking about a group of people asking to review (director expense forms) or the board budget, they’re welcome to come in and look at that.”
She said if a price were to be charged to answer questions, it would “depend on what staff member was helping them and how much time was spent.”
She said, to her knowledge, however, no one has ever been charged. She also believes a quote on the potential cost could be given ahead of time.
No one has ever been denied access to information nor is she aware of anyone denying access, Cole said, acknowledging certain records sought by members in April were not ready when requested but are now.
“Those were prepared for view in May,” she said, saying the members who had requested the documents for review cancelled their appointment to see them.
The members have said they’re concerned board expenditures are too high and are eating into profits.
According to a Web site put up by concerned members, www.rescuehilco.com, directors are compensated with a $600 a month retainer plus an additional $600 a month for attending the monthly board meeting. The directors receive additional fees for attending other meetings as well as free transportation for their spouses, free Internet service and Christmas bonuses. The directors have budgeted almost $300,000 for 2007 expenses.
Relating to expenses incurred by directors for out-of-state-based training, Cole said directors must attain their certification by the end of their three-year term and that she doesn’t believe any of the required classes are offered in Texas.
The classes are taken as required by the National Rural Electric Cooperative Association, Cole said, noting the requirements do change.
“The way we respond to that (concern of excessive expenses) is that one of the best ways to measure whether expenses are reasonable or not is to look at the distribution cost,” Cole said.
“The average cost is 2.98 cents added to a kilowatt hour. HILCO’s cost is 1.8 cents, which means that our members save about $11.80 per 1,000 kilowatts. That’s based on the state comparison with other Texas electric cooperatives,” she said, saying that information is based on 2006 numbers and that HILCO has not had an increase in cost per kilowatt hour.
HILCO has had two rate increases in its base rate, however, for its residential members in the past five years, according to the members with concerns and the cooperative’s Web site, www.hilco.org. In May 2002, the base rate for a residential account increased from $10 to $10.50 per month. The second increase, in February 2007, saw an increase to $14.50 per month.
Cole also responded to criticism that smaller water companies’ costs taken on by HILCO are now being subsidized by the membership at large.
She said concern for the community is a principle for any cooperative and that such acquisitions help provide a better quality of life for struggling smaller utilities.
“What that means is that when we as HILCO go in and purchase a small water company, it’s no longer a small water company, it becomes part of the big water company. These are no longer individual water companies but are part of the larger company,” said Cole, who said she also wanted to point out the cooperative’s “excellent customer service, with an average outage time of just more than two minutes per member.”
She said she feels the directors have tried to be open with the membership and that directors base their decisions on national recommendations.
Members may submit a concern in writing, with that information included in the meeting packet for directors to review, Cole said, saying member concerns are discussed with a reply typically sent back via the general manager.
“I do believe that when a matter is presented to the board they do their absolute best to make a decision in favor of the members,” she said.
Directors are elected by a majority of members in their districts, she said.
“They’re elected to represent their districts on the board and to represent HILCO’s interests in other things and to set the policies,” Cole said.
How the cooperative selects its directors changed in 2004, when HILCO moved from at-large representation to specified districts.
Cole said those districts have been redrawn several times due to changes in membership numbers, saying there is no set policy relating to how often or the parameters for that to be done.
She said she believes the districts have been aligned three times, including the original drawing.
Refuting a concern expressed by members, Cole said, “A board member has never asked me to change a district to keep someone from being able to run.”
HILCO has about 16,000 members, who together have about 22,000 meters.
Through the cooperative’s history, the number of board members also has changed. The board started with nine before going to five and then increasing to its current number of seven.
Under HILCO by-laws and policies as they stand, if a special meeting cannot be called, the members would have to wait until their annual meeting this fall to voice their concerns in an open forum and in front of the directors.
The annual meeting is held the fourth Thursday in September, with this year’s meeting set for Sept. 29.
At the annual meeting, part of the board will be up for election, and a majority of the members present could move for changes.
Members always have the opportunity to express their views at the annual meeting, Cole said.
“They are allowed to express their concerns for the co-op and bring any business they would like to the floor,” she said. “Also, at that membership meeting is when the members elect the board of directors from their district. Our last three board elections have not been a shoe-in for the incumbent. They have been challenged.”
As to a fear expressed by members they might have their electricity cut off if they ask questions, Cole said “that would not be a reasonable cause to cut someone’s electricity off.” Electricity is only turned off under such circumstances as non-payment, theft of service or temporarily due to an unsafe condition, she said.
Asked if there have been any threats of litigation made by any director toward any member, Cole said there have been none to her knowledge.
“The defining nature of a cooperative is the democratic nature of its organizing principles,” said Patrick Lavigne, spokesman for the National Rural Electric Cooperative Association, a trade organization. “Every member has a vote, and every member has one vote. No matter how much electricity you buy, you have one vote, and you have an annual opportunity to vote.”
The NRECA is involved in providing legislative, regulatory and communication support, as well as training, for its member cooperatives, but is not involved in policy with its individual coops.
“We don’t know what the HILCO policies are,” Lavigne said, noting that cooperatives do have to operate democratically and have at least an annual meeting that is open to members.
An umbrella group, the NRECA represents more than 900 co-ops in 47 states.
Lavigne said comparative studies done of the different coops are considered proprietary and available only to the member coops.
“I think the board is very concerned with what they’re hearing. I think the board is listening and is more than willing to listen to the concerns,” Cole said. “I had never heard any concerns prior to this.”
As part of their efforts, the concerned members have told the Daily Light they intend to work with lawmakers to increase transparency and accountability for electric cooperatives.