Commentary

Reforms needed at Virginia electric co-ops

September 3, 2021 12:01 am

Transmission lines in Louisa County. (Ned Oliver/ Virginia Mercury)

By Seth Heald

Summer is annual-meeting time at Virginia’s 13 electric cooperatives. Like all consumer cooperatives, electric co-ops are owned by their customers (called “member-owners”) and are supposed to be democratically governed. The key to genuine democratic control is board-of-director elections, which happen at each co-op’s annual meeting, where member-owners can vote for board candidates.

Unfortunately, fair elections do not always happen at some Virginia co-ops.

Two examples from Virginia electric co-op annual meetings this month demonstrate ways large and small in which incumbent co-op boards game the system to help their favored board candidates. The most egregious case occurred at Rappahannock Electric Cooperative (REC), which serves rural and suburban Virginians in 22 counties. In a five-way race in REC’s August board election there was a clear winner among co-op member-owners who selected a candidate. Hanover County businessman Roddy Mitchell got more than twice as many member-owner votes as any of the four other candidates.

A group of Rappahannock Electric Cooperative members are pushing for more transparency from the board of the co-op, Virginia’s biggest. (Rapphannock Electric Cooperative website)

But through the needlessly arcane and confusing proxy-voting process that REC uses, REC’s board was able to allocate some 6,000 additional votes to the board-favored candidate, thereby swinging the election win to him. That board-favored candidate came in fourth out of five when looking at votes that member-owners cast for candidates.

When a board controls 40 to 60 percent or more of all votes, as REC’s board generally does, the board effectively controls the election outcome.

REC’s board controls huge numbers of votes each year because proxy ballots left blank are deemed by REC’s board as a delegation of the member-owner’s vote to the incumbent board to decide whom to cast them for. Moreover, REC offers those who send in a proxy a chance to win cash prizes, which encourages member-owners to submit blank proxies, even if they have no interest in the election or makeup of the board. REC election tally forms going back over a decade show that every year REC’s incumbent board controls enough blank proxies to control election outcomes. For the past 12 years no candidate has won a single race without getting the board-controlled votes.

Thus, the way to win an REC board election is to please incumbent board members, not to get the most votes from member-owners. That isn’t fair, it isn’t democratic, and it leads to board groupthink. No wonder incumbent REC board members stay in their well-paid positions for decades or for life.

A National Rural Electric Cooperative Association governance task force report recommended against using board-controlled proxies to swing election results. But REC’s board continues to ignore that recommendation years after it was made.

Meanwhile, neighboring Shenandoah Valley Electric Cooperative’s board changed the co-op’s bylaws at a closed meeting in June to help out an incumbent board member facing a strong challenge from another candidate in the August election. The board added a bylaw provision saying that in the case of a tie between an incumbent and non-incumbent candidate the incumbent would be deemed the winner of a one-year board term!

There is currently no government oversight of Virginia electric co-op elections, and no law to ensure fair board-election procedures, prohibit abusive proxy practices, or prohibit using board-imposed bylaw changes to favor incumbents.

This is important because electric cooperatives are essential service providers that operate as monopolies. Monopoly utilities seldom act in the best interest of their customers unless subjected to meaningful scrutiny, accountability, and independent oversight. Such oversight is lacking when co-op boards have ironclad control of board-election outcomes. It’s time for the General Assembly to step in and ensure basic, fair election practices to give Virginia electric cooperative member-owners a true say in the governance of the utilities they own.

Seth Heald is a retired U.S. Justice Department lawyer and has a master of science degree in energy policy and climate. He is a member-owner of Rappahannock Electric Cooperative and co-founder of Repower REC, a campaign to bring genuine democracy to Virginia’s electric co-ops. More information at RepowerREC.com.

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