Cobb case prods new push for EMC changes

Recent criminal charges involving the head of Marietta-based Cobb EMC are fueling a new push to change state law on electric co-ops in Georgia.

Advocacy groups Common Cause and Georgia Watch say Georgia's 42 co-ops, which  serve about 4 million customers statewide and nearly 1 million in suburban Atlanta, aren't as transparent as they should be.

They're pushing a package of changes they say will clarify that Georgia law allows co-op customers -- who are also co-op owners -- to view co-op books and records.

They say the Jan. 5 criminal charges against Cobb EMC head Dwight Brown drive home the need for member access to information: "The situation in Cobb is a classic example of the fact that certain EMCS are operating in a somewhat inbred manner,” said Jim Kulstad, a spokesman for Common Cause.

"Mr. Brown's indictment serves as a serious indicator of the problems that can follow when decisions are not transparent," said Georgia Watch executive director Angela Speir, adding that customer oversight is what allows co-ops to escape the regulatory oversight imposed on other monopolies. Speir is a former Public Service Commission member.

Georgia EMC, a non-profit trade association for the state's cooperatives, said it had heard nothing of any proposed legislation and knew of no lawmakers who were poised to take up such legislation.

"Georgia statute treats EMCs the same as any other co-ops and other businesses," said spokeswoman Terri Statham, adding that the group's practice is to comment on pending legislation only to the appropriate legislative committees.

A Cobb County grand jury indicted Brown Jan. 5 on 31 counts of racketeering and theft related to alleged transfers of millions in co-op assets to a company that benefited Brown. The arrangement was first reported in the Atlanta Journal-Constitution in 2007.

Member access to information was a key part of the indictment, which said Brown and others conspired to mislead co-op members about the diversion of their assets. Brown's attorney and the co-op board both say he is innocent.

Common Cause's Kulstad said the groups know of no other co-op with the kind of problems alleged at Cobb. But he said "by opening up the system, I think it's less likely to happen somewhere else."

The Cobb EMC situation is likely an outlier. But it reflects a tension in the electric cooperative world, which has grown far beyond its roots.  Formed in the 1930s, many co-ops are now sophisticated  businesses that rely on member involvement in their governance but not in their business operations.

Co-op members elect board members, but typically aren't allowed to attend board meetings, for instance. Last fall, when a Roswell woman pushed to attend a board meeting at Sawnee EMC, she was told to meet with the chief executive to explain why. Her request was denied, although she was allowed to attend a board sub-committee meeting.

In a statement, Sawnee said its policies exist for a reason. "Our board routinely deals with trade secrets, competitively sensitive and confidential information," it said. "EMCs, like most corporations, operate on a representative governance structure. EMC members ultimately control the cooperative by electing directors to represent the interests of all members."

It said co-op members can request to meet the board if their concerns aren't addressed by co-op staff, but that the Roswell woman, who asked not to be identified, had not raised any issues.

Co-ops can also restrict member access to records. Current law says co-op members in good standing have the right to examine or reproduce co-op books, records and any documents related to its business.

But it also lists five exceptions. Co-ops don't have to produce records to "gratify mere curiousity," for instance, or records that would violate members' privacy. They don't have to produce records that would be used to hurt the co-op either.

Cobb once used the exceptions to limit a board candidate's access to member lists he wanted to use to campaign against an incumbent.

Georgia Watch and Common Cause propose tweaks to that law, rather than an overhaul. Their proposal would require co-ops to presume a member's request is for good reason, but would keep the exceptions in place. It would clarify that member lists can be withheld only if the requester fails to agree not to use them for sales. And it would give co-ops the same three-day response limit that exists in the state's open record law.

Common Cause and Georgia Watch circulated a similar set of tweaks to Cobb County lawmakers last year, after a rancorous customer lawsuit against Cobb EMC.

They couldn't find a legislative sponsor: "Clearly, there was strong interest and support, but no volunteers to take on the lead sponsorship on this," Kulstad said.

He said he assumed that was because of "the influence of such a large entity in their district." Cobb delegation members approached about the co-op reforms last year did not return calls for comment this week.

"I think we have a  much clearer opportunity this year," Kulstad said. "We're hopeful that a strong Republican sponsor, from Cobb or not, will come forward."