Greenville, Ala. —- Despite the turmoil that has engulfed Pioneer Electric Cooperative —- investments that blew through $18 million of its members' money, a lawsuit, an organized group's threat to unseat board members —- Steve Harmon doesn't expect much of a turnout on this chilly Saturday morning.

As he prepares to open the doors to Pioneer's annual membership meeting, held in October, he predicts fewer than 50 people will show. For now, that suits the co-op's new general manager fine.

Pioneer is moving forward, Harmon says, even if some co-op members insist on dragging it back.

"It's over, " he says. "That group doesn't have much following anymore."

Harmon's read on his members is about to be tested.

Pioneer is one of 900 rural electric cooperatives created during the Franklin Delano Roosevelt era to wire the rural United States. It is in a rare position for a co-op: in the hole, with member equity in the negative.

Its near-demise can be traced to an attempt to build a propane and trucking empire.

The venture lost millions and exposed other problems: The co-op had become a self-perpetuating fiefdom, an unregulated monopoly that —- like most co-ops —- was exempt from oversight because its customers own it and elect its directors.

But Pioneer's members hadn't done that. By the time they rebelled in 2004, Pioneer hadn't had a board election since 1969.

Member apathy proved costly.

Today, Pioneer Electric sells the most expensive power in Alabama to some of the poorest people in Alabama, making Pioneer an extreme example of how badly unregulated monopoly co-op customers can fare when co-ops get ambitious.

Pioneer's ambitions weren't unique. Many co-ops nationally —- including Cobb EMC in suburban Atlanta —- began building for-profit businesses in the 1990s, as a way to prepare for widely expected electric competition that never came.

In Pioneer's case, the ambitions devolved into open warfare between co-op members and management.

It took a lawsuit to even begin to straighten it out.

Harmon, brought in to clean up the mess, said he doesn't blame Pioneer's nine-member board, despite the determination of some co-op members to boot three of them last fall.

He says customers don't understand the extent to which Pioneer's missteps were a product of the times —- or how much board members rely on staff.

"How much due diligence can you ask from a board member, really? You're a board member. You ask the general manager, and you ask the staff, and you ask questions at the board meeting."

Harmon says board members have learned their lessons. "They're more cautious now."

Formidable adversary

A substitute teacher named Margaret Pierce is waiting outside Greenville High School when Pioneer staff open the doors. A trickle of fellow members follow the tall grandmother inside. She surveys the voting setup. Employees smile nervously. For more than two years, Pierce has been Pioneer's public enemy No. 1.

Pioneer is headquartered about 40 miles down I-65 from Montgomery. Its Alabama Black Belt territory includes the route of most of the Rev. Martin Luther King Jr.'s Selma-to-Montgomery march.

Towns like Mosses in Lowndes County —- one of the poorest counties in the country —- appear little changed from those days.

Even under the best circumstances, Pioneer Electric wasn't going to be rich. Unlike mega-co-ops in suburban Atlanta, Pioneer never got a boost from a sprawling city. But it was Pioneer's ambitions, not its territory, that nearly sank it.

Pierce was among the first to suspect problems.

An Alabama Power retiree, married to a Pioneer Electric retiree, Pierce never dreamed she would become a utility activist. But Pierce helped form the Rural Electric Membership Action Committee four years ago to take on Pioneer.

Rates had climbed, and the co-op had stopped returning any of the members' equity investment in the co-op, called patronage capital.

Pioneer's leaders, meanwhile, were running the co-op like "it was a private corporation, and they began cutting out the members, " Pierce said.

"They'd hold their annual meetings Tuesday mornings at 8 a.m., when everybody worked. The notices would be in tiny print buried in Alabama Living, " she said, referring to a state co-op magazine.

Pioneer's then-general manager, Malloy Chandler, would later concede in court that members hadn't elected the board in more than three decades. Lacking a quorum, the co-op board chose its replacements through a nominating committee.

Members saw more evidence of a disconnect, like an acidly worded report from the U.S. Department of Agriculture criticizing the co-op's sale of its satellite franchise to a private company. It said the company paid Chandler more than $1 million —- and three other executives a total of $300,000 —- to sign noncompete agreements.

In an interview, Chandler said the noncompete contracts helped the co-op get a good price for the satellite business.

Itch for propane

It doesn't take long for the crowd to top Harmon's expectations. A line soon stretches out the door. Members gather in knots, talk power bills: "For two years or better they've been crazy, " says James Scarver. "I don't have a clue why. That's why we're here. Alabama Power, their rates are low. People come out from the city bragging about how cheap their power is."

Three incumbent board members are on the ballot. About 150 people —- three times as many as Harmon had predicted —- show up.

The problems that packed last fall's Pioneer annual meeting officially began in the late 1990s.

Through a sister company headed by Chandler, Pioneer eagerly bought mom-and-pop propane operations: "I've seen people with the itch to buy a car, buy a boat or get married, " said Bobby Lane, who sold Lane Propane to Pioneer. "But I've never seen anybody with an itch to get into the propane business like these folks."

The National Rural Utilities Cooperative Finance Corp., or CFC, provided financing. A bank formed in 1969 by the nation's co-ops, CFC helped 200 co-ops prepay federal loans, removing them from federal oversight. It also encouraged co-ops to go into side businesses like propane.

Co-ops "were being urged to diversify by CFC, " said Glenn English, director of a national co-op lobby. "It was an anti-dereg thing, where you would have bundled services and increase customer loyalty."

Some co-ops balked. "You've got some general managers who are very much entrepreneurs, very aggressive, very much, 'I want to do my own thing.' And you've got others who say, 'I like the way it is, ' " English said. "Each co-op is independent and autonomous. That needs to be understood."

At Pioneer, the co-op's cash gradually got sucked into the propane business, even though Pioneer had no ownership stake in it.

CFC loaned more to the flailing propane company, even as it urged the co-op to take on its debts, which the co-op did. In a year's time, members' equity in the co-op dropped from $18 million to negative $78,000, according to court filings. It would drop to negative $1.5 million the next year.

Pierce's group pieced the problem together after one of them stumbled on a loan document in county records. After being refused access to a board meeting, Pierce said, they sued. The lawsuit accused co-op management of failing its fiduciary duty to members and, later, CFC of extortion. CFC said in a statement that claims against it were dismissed as part of a settlement.

The lawsuit was settled in 2005, but not without a lot of ugliness. Co-op members berated co-op employees at grocery checkouts. Dozens of sheriff's deputies guarded one membership meeting. A co-op executive wrote local pastors, saying that Pierce's group attacked him for being a Christian. A newspaper ad said the group wanted to "sell our co-op to the highest bidder ... Should that happen, the person who restores your power after the next big storm may have to come from Timbuktu."

"Lights Out, " it read.

Chandler retired under terms of the legal settlement, and Harmon arrived a few months later, in January 2006, determined to mend fences.

He sold the propane business and started paying down debt —- although he says rates will have to stay high for at least four years. He also prepared for the first annual meeting of the new era.

The co-op couldn't afford the kind of festive event some co-ops throw. But it would give out free tickets to Farm Day and raffle off donated prizes, including two TVs, a lady's change purse, two caps and some degreaser, a sweatshirt from the Montgomery sewer department, a padlock and a Weed Eater cover.

'A transparent co-op'

Pierce's lime green suit jacket is everywhere as she works her people. Only Harmon bridges the tension. He smiles at Pierce and greets a tiny woman named Oleene Williams warmly, despite her recent authorship of a letter blasting the ballot design. "No, " he says evenly, when she asks if he liked the letter.

The buzzing auditorium quiets completely as Harmon takes the podium and breaks into loud applause when he announces what most already know: "Now we have no other business other than selling electricity, " he says.

And so began the first annual meeting of the new Pioneer. Members buried their noses in the co-op's financial report as an auditor detailed the co-op's finances. Hands shot up with questions about the past.

Harmon congratulated members for their involvement but urged them to move on: "We want to run a transparent co-op, " he said.

Pierce spoke last: "The No. 1 thing, no matter how this vote goes, is we must stay involved in our co-op. I think you see what happens when we don't."

When the votes were tallied, all three incumbents lost by a 2-to-1 margin. Members filed out smiling, into a day turned unexpectedly balmy.

They said they liked this new general manager.

They said they'd be back to oust three more board members the next year.