Seventy years ago, a group of farmers northwest of Atlanta joined a power-to-the-people movement then sweeping rural America.

They ponied up a few bucks apiece, took out federal loans and formed a customer-owned rural electric cooperative, eventually bringing lights, washing machines and daily iced tea to an area too poor and sparsely populated to interest the big money at Georgia Power.

Today, the suburbanites who get power from that once-rural co-op are captive customers of an aggressively expanding conglomerate that is a customer-owned co-op in little more than name.

One of the biggest co-ops in the country, Cobb EMC is a monopoly and virtually unregulated, on the theory that its customers, who own it, exercise control.

They don't.

Marietta-based Cobb EMC was built and billed as an enterprise that cared more about its customers than big, for-profit utilities do.

But over the past decade, most Cobb EMC customers would have fared better with Georgia Power Co. or just about any other electric provider in the state —- had they had a choice. Instead, they've had the highest home cooling bills in Georgia over the decade, according to Georgia Public Service Commission records. Only in the past two years has Georgia Power begun to catch up.

Because Cobb EMC is a cooperative, its high prices include money charged to customers as an investment in the co-op.

While most co-ops reimburse that invested money to customers over time, Cobb EMC hasn't returned a nickel of it in more than 30 years: It was sitting on $240 million of ratepayer cash at the end of last year.

Meanwhile, Cobb EMC has invested millions of its customers' dollars over the past decade to build a for-profit company called Cobb Energy. That company operates Cobb EMC and is tied to a small army of other businesses that venture far beyond the co-op's core mission.

By operating a for-profit electricity business under the auspices of a customer-owned nonprofit co-op, the Cobb EMC-Cobb Energy conglomerate has been able to avoid the regulation —- and transparency —- required of other electric companies like Georgia Power.

The co-op that customers own, meanwhile, has become little more than a husk.

And though their monthly bills helped build Cobb Energy —- including a $10 million direct investment in 1998 —- the co-op's customers no longer own a majority of the company.

According to Cobb EMC's Web site, the co-op now owns 30 percent of Cobb Energy. A 2004 Cobb Energy filing with the Securities and Exchange Commission listed its major shareholders —- among them, the CEO who heads both Cobb EMC and Cobb Energy, Dwight Brown.

Brown and other co-op officials did not respond to repeated requests for comment for this article, and public records do not indicate whether Brown paid anything for his stake.

Few public records are in fact available for Cobb Energy or Cobb EMC.

As a privately held for-profit, Cobb Energy doesn't have to give the ins and outs of its business to anyone.

As a member-owned cooperative, Cobb EMC isn't required to give detailed information to anyone, either —- not regulators, not lawmakers, not the federal agency that helped create it, not even its own customer-owners.

Humble beginnings

The fact that the Cobb EMC-Cobb Energy conglomerate has so little outside oversight is a function of its history.

The former Cobb County Rural Electric Cooperative was born in 1938 with 489 household members and 14 commercial accounts.

It was among more than 900 co-ops —- including 42 in Georgia —- that began wiring the rural United States in the 1930s and 1940s, using low-interest federal loans and the same business model that farmers used to buy seed and sell crops.

The model works like this: Customers pay a small fee to join, then a little extra on their bills for their ownership stake. That extra money belongs to customers. Co-ops typically refund it, although without interest, over time.

Georgia co-ops collectively refund an average of $16 million a year —- although Cobb EMC hasn't returned its customers' money in three decades. In a recent newsletter to customers, Cobb EMC said it uses their money to invest in the co-op's infrastructure.

Co-op customers are supposed to govern their power provider by voting on its board of directors every year, an exercise that co-op supporters say makes them self-regulating. For that reason, the Georgia Public Service Commission doesn't regulate co-op rates.

But co-op members often don't participate. Just 5.8 percent of U.S. co-op customers voted in 2005 board elections, according to an Atlanta Journal-Constitution analysis of data on co-ops with federal loans. In Georgia, the percentage was 2.4 percent. And only 485 people —- less than three-tenths of 1 percent of its 189,000 members —- showed up to vote in Cobb EMC's board election last year.

U.S. Rep. Jim Cooper, a Tennessee congressman whose father started a co-op, bemoans that co-ops no longer work as designed.

"Rural electrification was the next greatest thing to God Almighty. Think of just the labor-saving devices alone, " Cooper said, noting co-ops were "intended to be the most pro-consumer organizations in America.

"They were set up to electrify rural America because private companies refused to do it."

Today's co-ops still tout their power-to-the-people history, he said. But many have forgotten "that they are managing money they do not own."

In co-ops' defense

Co-op supporters strongly disagree that they've lost touch with their roots: "Co-ops are more engaged with consumers than any other utility model, " said Paul Wood, president of Georgia EMC, a co-op trade association.

But co-ops have changed greatly over the decades. Once-rural co-ops now ring cities like Dallas and Washington, as well as metro Atlanta, which has three of the 10 biggest co-ops in the country.

Many co-ops have less oversight than they once did. The federal government, as the co-ops' lender, at one time had a say in their operations. But that isn't so now for Cobb EMC and 200 other co-ops. Using money from a co-op bank, they bought out their federal loans in the 1990s —- thus freeing themselves from federal oversight.

That helped those co-ops, including Cobb, to move far afield from their original objective. They embarked on ambitious expansion strategies, many using loans from that bank, the National Rural Utilities Cooperative Finance Corp. Co-ops branched into businesses as far flung as orange groves in Florida and a golf resort in Texas. Such ventures would have raised huge red flags if done by regulated, for-profit utility monopolies because of the possibility that captive ratepayers' money could be used to subsidize competitive businesses. Co-ops have no such check.

Few co-ops embraced diversification as fervently as Cobb EMC.

Cobb's $120 million federal loan buyout, in 1996, was the biggest in the lending program's history. The next year, Brown formed Cobb's first for-profit offshoot. More followed.

At the time, Brown said the side businesses would help preserve the co-op once deregulation —- then widely considered imminent —- allowed customers to buy power from competitors. That competition never came.

Today, the Cobb EMC-Cobb Energy conglomerate's ventures include pest control, mortgages, consulting, a customer call center, staffing, security systems, natural gas and another co-op in South Georgia.

Cobb Energy also has operated Cobb EMC for nearly a decade. Huge, multistate utility holding companies like Georgia Power parent Southern Co. use similar affiliates to consolidate functions like human resources. Cobb Energy, though, takes it further, doing essentially all of the co-op's work under a 40-year management contract. Cobb Energy collects a profit on the contract and has used it to back up its credit, providing it as collateral to get millions in loans.

Behind closed doors

Cobb EMC still exists. It has a 10-member board. It owns wires and power poles and meters. But it has no employees besides a handful of executives. Cobb EMC's board still sets rates and approves debt, investments and contracts. But many decisions happen behind a door closed to customers who own the co-op.

Cobb EMC's prices were among Georgia's highest as it built Cobb Energy.

Some customers have questioned the rates, said David Welden, head of a growth watchdog group in West Cobb.

Still, "the average citizen is kind of oblivious, " he said, both to the comparative size of their bills and to "the significance of what a co-op really is."

Some even think they pay less than Georgia Power customers. It's what longtime Cobb customer Mark Oatman thought: "We're members of a club. I thought it meant we got a better deal."

Brown, the CEO, has said the relationship between Cobb EMC and Cobb Energy helps cut the co-op's expenses.

But he and others clearly stand to benefit, too. The 2004 Cobb Energy filing with the SEC listed an employee stock option plan, Brown and Brown's wife as owning or controlling at least 10 percent of a class of Cobb Energy stock.

Brown's leadership also has been compensated in other ways.

His co-op president's job paid him between $195,000 and $300,000 per year over the past few years, according to federal tax records. The records don't indicate what Cobb Energy might have paid him on top of that, since the for-profit isn't required to make that public.

Critics, including a corporate governance expert, say the Cobb EMC-Cobb Energy setup is troublesome because Brown and others have served simultaneously on both Cobb EMC and Cobb Energy boards —- putting them on both ends of what should be arm's-length transactions between the two enterprises.

"It's not at all unusual for a nonprofit to set up a for-profit, " said Charles Elson, director of the John L. Weinberg Center for Corporate Governance in Delaware. The presence of someone on both sides, though, means that the transactions should come under higher scrutiny, he said.

"It's something you would want to avoid, " Elson said.

Last year, the New York-based credit-rating agency Standard & Poor's also raised concerns.

It downgraded Cobb EMC's credit, citing its affiliated for-profit ventures, co-op members' exposure to those ventures and "corporate governance issues [that] may arise relating to the relationship between Cobb and Cobb Energy."

The agency withdrew that report a few months later, but not because it had changed its mind, a Standard & Poor's spokesman said.

The co-op, already subject to virtually no public oversight, decided to shuck private oversight, too.

It asked that Standard & Poor's not rate it anymore.

That leaves Cobb EMC's 189,000 customers to keep an eye on the co-op they own.

To date, not many have.

—- Staff writer Carrie Teegardin contributed to this article.

BIG SPENDING, FEW DETAILS

> $20 million for naming rights: The new Cobb Energy Performing Arts Centre is scheduled to open Sept. 15 just inside the Perimeter on I-75. Cobb EMC says no ratepayer money was used in the marketing deal, but there's no way co-op customers can confirm that. Their electricity payments flow to Cobb Energy to pay for management and other services, and the company's books aren't open. (By contrast, if Georgia Power paid $20 million to market an affiliate, state regulators would make sure the monopoly's customers didn't pay for it.)

> $6.2 million for affiliate headquarters: The co-op built an office for Cobb Energy subsidiary ProCore Solutions, tax, loan and property records show. Then, in 2003, the co-op sold the property to Cobb Energy for $6.9 million —- and loaned the company the money to buy it.

> $1.5 million for retirement loan: Cobb EMC's 2002 federal tax filing lists a loan for an unnamed co-op executive's retirement plan. The sum drops steadily over the next three years. It's unclear whether the loan is being repaid or forgiven.