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Governor signs new rules for electric cooperatives

COLUMBIA, S.C. – On Friday, May 17, Gov. Henry McMaster signed legislation that revises rules that govern electric cooperatives, increasing transparency to co-op members and adding limited government oversight.

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Legislators chose not to impose prescriptions on such things as who can be elected to governing boards, how often boards can meet or board compensation, leaving those decisions to cooperative members. Instead, the new law requires co-ops to make more information available to the members, who are both owners and customers of the utilities.

“The new law is an important recognition that good governance starts with an informed membership, not with government directives,” said Doug Reeves, who was chairman of the state association of electric cooperatives when the issues arose. “The best cure for what ails democracy is sunshine. Then, let the owners of these private businesses take it from there.”

Reeves, who called together co-op leaders last year to address the issues, is also an elected member of the board of trustees and its chairman at Edisto Electric Cooperative in Bamberg.

The signing ceremony took place one year to the day from the Tri-County Electric Cooperative annual meeting that was the catalyst for the co-ops’ self-examination and the legislative initiative. When Tri-County members complained about election improprieties at the co-op’s May 17, 2018, annual meeting, news reports revealed numerous questionable practices. News coverage, law suits and special membership meetings followed, where members ousted the entire board, elected a new board and approved a new set of organization bylaws.

The ousted board was accused of excessive compensation and meeting too often, sometimes holding 15-minute meetings and claiming to have worked on dates that did not exist. Employees alleged that one board member paid less than $3,000 for a $300,000 power line that was installed on his farm.

Reeves called together the state’s 20 co-op board chairs, their attorneys and CEOs—known as the Governance Task Force—to address the issues head-on and explore what co-ops could do to reassure members.

A local state representative proposed legislation to curb excesses and open co-op information and practices to members.

“When I called the first meetings of the Governance Task Force, we all shared a combination of worry, frustration and uncertainty about what the future would bring,” said Reeves.

In the 12 months since the controversial Tri-County Electric annual meeting, co-ops worked with legislators to craft a law that would preserve the independence of electric cooperatives while ensuring members had access to the information they need to govern their co-ops.

Co-ops will now give members advance notice of board meetings and make meeting minutes available. Voting periods for board members will be extended. Board compensation will be published online for members. The Office of Regulatory Staff will be authorized to examine co-ops’ adherence to their bylaws and the law.

State Rep. Russell Ott, the author of the legislation, praised the co-ops’ willingness to address the issues.

“I believe this model, the cooperative model, is the best we could possibly have,” said Ott. “It’s the one closest to the people.”

Some co-op leaders still view the new law as imperfect, but there is little doubt that it provides cooperatives with a clear path forward and one that should be applauded by consumer-members across the state.

“None of us would have wished for the experiences of the past year, but we can still celebrate this achievement,” said Berl Davis, current chairman of the state association and the CEO of Palmetto Electric Cooperative.

Gov. McMaster praised the cooperation among cooperatives and legislators.

“We’re very proud of our people, proud of this state and proud of this legislation”, McMaster said. “It took some doing. It answers a lot of questions—accountability, openness, transparency—and it’ll make things better for everyone.”

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