Poll funded by co-op helps board members, critics say

By Jeremy Redmon and Margaret Newkirk
mnewkirk@ajc.com

The Atlanta Journal-Constitution

Marietta-based Cobb EMC spent about $18,000 recently to poll customers, asking whether they would support the current board in an election if they knew what good the co-op had done.

The nonprofit electric cooperative, which serves nearly 200,000 metro customers, says its board approved the poll to test customer attitudes and determine whether the co-op had been defamed during a bruising two-year legal battle over alleged siphoning of co-op assets.

Critics aren’t buying it.

They say the co-op’s poll appears to be selling customers — who elect co-op boards — on the virtues of the current 10 board members, seven of whom could be facing re-election soon.

According to a recently-filed court affidavit in a supposedly settled lawsuit against Cobb EMC, the pollsters asked a customer listen to a list of co-op accomplishments. A pollster called William C. Sharp III on June 7. Sharp is one of seven customers who sued the co-op in 2007.

According to the affidavit based on Sharp’s recollection of the call, the pollster asked whether Sharp “would be more or less likely to support the incumbent board of directors in upcoming Cobb EMC board elections” based on five statements.

“Due to the actions of Cobb EMC leadership electric rates have remained low compared to other utilities,” was one statement.

Another said U.S. Department of Energy figures show “Cobb EMC has saved its members over $77 million between 1999 and 2007.”

Sharp’s attorney Pitts Carr said he filed an affidavit in court “to show what — in our opinion — is the clear intention of current management to aggressively support the current directors in the election process.”

He also said the “so-called poll’s representations of massive savings are completely at odds with evidence produced in this case.”

Cobb EMC officials confirmed they conducted the poll, its cost and the fact that co-op funds paid for it. They did not dispute Sharp’s account of the questions, but would not provide copies of the questions.

EMC officials said they surveyed only about 400 co-op customers and denied that the survey was intended to influence board elections.

They declined to release the survey’s results but indicated they were positive in support of the co-op’s directors.

Elections become flashpoint

The Cobb EMC saga is now in its second year.

It’s also in a kind of limbo.

Both the co-op and its critics are waiting to see what will come of an ongoing Cobb County grand jury investigation of co-op leaders.

County District Attorney Pat Head and the Georgia Bureau of Investigation executed search warrants at the co-op’s offices and at the homes of its chief executive, Dwight Brown, and three board members in April.

The warrants alleged theft and racketeering, based on many of same facts that were at issue in a customer lawsuit settled in December.

Meanwhile, the co-op’s board elections have become a flashpoint.

Customers elect co-op directors, who are considered volunteers.

Cobb EMC’s directors get $500 to $600 in per diems to attend committee and board meetings, as well as retirement benefits. Cobb’s three newest directors received between $107,000 and $130,000 in retirement benefits when they joined the board, according to court documents.

Cobb EMC hasn’t had a board election since September 2007.

Seven customers sued the co-op and its for-profit operating affiliate Cobb Energy and management a few weeks after that election. The suit said the for-profit had siphoned the nonprofit’s assets, unjustly enriching co-op management.

When the lawsuit was settled in December, the co-op and its leaders admitted no wrongdoing. But they agreed to end an operating contract with Cobb Energy that lay at the heart of the suit.

The settlement deal laid out a schedule of votes that would allow customers to vote on seven of the co-op’s 10 board members this year.

No vote has taken place since then. Instead, the two sides have argued over the election rules, each accusing the other of trying to slant the rules in their own favor. Because no outside body has oversight over co-op elections, that fight has played out in court.

The plaintiffs say co-op officials are trying to ward off what they consider a potential roust of the board by co-op customers.

Co-op spokeswoman Carol Cookerly says it’s the other side that’s trying to manipulate the process: “They seem to be focused on one and only one thing, which is gaming the system to win elections,” she said.

In May, Cobb County Superior Court Clerk Stephen Schuster ordered the votes to go forward under the co-op’s terms, after the co-op appealed an earlier ruling that the votes should proceed under the plaintiff’s terms.

The co-op rolled out its customer survey believing that board elections were imminent.

But plaintiffs appealed, putting the elections on hold again.

Attorney Carr said the co-op’s plans includes procedures designed to protect the current board against challengers.

Among other reforms, he said plaintiffs wanted the co-op banned from using member funds to back board candidates.

Three of metro Atlanta’s other large co-ops, Jackson EMC, Coweta-Fayette EMC and GreyStone Power, say they would not use co-op funds to campaign for board members or conduct polls such as Cobb’s.

“We feel it is our members’ right and responsibility to make their own decisions and vote for the candidate they feel is most qualified,” said Gary Miller, GreyStone’s CEO.

On the national level, the National Rural Electric Cooperative Association has no position on the use of co-op money to support board candidates, according to spokesman Patrick Lavigne. He said the 
association had never encountered the practice before.

Cobb officials, meanwhile, say the survey was a legitimate use of co-op funds, and that its cost pales next to what the litigation cost the co-op and its insurers.

Other co-ops don’t have that history, Cookerly said.

When inquiring about other co-op election policies, she advised a reporter, “You might also determine whether any of them have been faced with two years of wide open allegations and had to pay 
$12 million in legal bills.”