National Electric Co-op Trade Association Report Reveals Repower REC’s Key Demands Are Best Governance Practices

NRECA’s own Governance Task Force Report supports the key governance reforms Repower REC seeks. An REC vice president was on the task force.

Repower REC has argued for two years that Rappahannock Electric Cooperative (REC) needs reform. Now we’ve learned that a formerly secret report, written by REC’s own trade association and made public last week by a watchdog organization, agrees with us. A National Rural Electric Cooperative Association (NRECA) task force authored the report. NRECA is the national trade association for America’s 900-plus electric co-ops. Its report supports two key planks of our campaign:

  1. REC should reform its board of directors election process; and
  2. Member-owners should be able to observe board meetings.

But REC’s board refuses to discuss, much less put these reforms in place.

The NRECA task force had 20 distinguished electric-co-op leaders. Their job was to examine governance problems at the nation’s electric co-ops. The NRECA Governance Task Force issued its report in February 2018. It was available to all electric co-op board members and managers. It is reasonable to assume REC board members and senior management have been aware of its recommendations since early 2018. REC Vice President John Hewa was a member of the task force.

REC’s blank proxy election practice allows REC’s board to determine election outcomes. Member-owners who leave their proxy ballot forms blank are deemed to have delegated their vote to the board itself to cast for them. This gives sitting board members the power to assign the member-owner’s vote as the board sees fit. As a result, the board’s controls several thousand blank proxies each year.

The board has used these blank proxies to alter election results three times in the past four elections. Three times the board-favored candidate failed to receive the most direct votes. But these candidates still won election because the board cast thousands of blank proxy votes for the board’s favored candidate.

The NRECA report recommends against giving incumbent boards a large number of proxy votes. It says this “may give the perception that the board controls or improperly influences director elections.”

At REC it’s not just a perception. It’s the reality.

John Manzari ran for a board seat this past August. He ran on a platform seeking reforms that we now know NRECA recommends. He received the majority of votes cast directly by members. But he still lost the election because the board cast more than 2,000 blank proxy votes for the incumbent.

REC employees solicited and collected many of these blank proxies from member-owners. They did so when member-owners came to the co-op’s offices to pay a bill in cash or resolve a payment issue. REC employees talked up the prizes these co-op members could win by signing the form.

The employees said it was okay to leave the form blank. They insisted the form be returned on the spot to the employee. This leaves the members no time to inform themselves about the candidates.

The employees’ action ran counter to the stated rules of the election. Member-owners were to mail their ballots to an independent election administrator. The REC employees’ irregular practice prevented members from informing themselves about candidates. Worse, it encouraged member-owners to cast blank proxies only to have a chance to win a valuable prize.

By allowing these election practices incumbent REC board members are rigging the system. They’re allowing their favored candidates to hold on to well-paid positions for many decades. They want board members to do so without real accountability to the co-op’s member owners. These favored candidates are usually sitting board members themselves.

NRECA’s governance task force recommended another reform Repower REC seeks. Repower REC has urged REC to open its board meetings to co-op member-owners. The Task Force said open meetings “facilitate transparency and openness.” Further, the Task Force argued open board meetings “strengthen the democratic nature of cooperatives.” Many electric co-ops around the country allow this. REC’s board has fiercely resisted it.

This has forced Repower REC to go to court. We’ve done so to demand the board allow us to petition for a member-owner vote to change the board’s unfair practice. REC contends member-owners don’t have the right to vote on whether their co-op’s board meetings should be open for member-owners to observe.

The REC board’s refusal to consider these issues in a dialogue with Repower REC is unjustifiable. Even more disturbing, REC’s board accused Repower REC’s co-founders of lacking “good faith” for even proposing these two reforms.

We now know these are same reforms REC’s own trade association recommended. Further, an REC vice president served on the task force that made them.

We don’t know why REC’s board has so strongly resisted common-sense, democratic, NRECA-recommended reforms. These needed changes would bring our co-op in line with best governance practices.

It’s hard to avoid the conclusion that board members don’t want to compete on a level playing field in fair elections. Nor do they want their constituents to know what board members are doing. REC’s board must end the undemocratic blank proxy system that allows the board to control election outcomes, and to open board meetings.

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