CoServ Watchdogs

As most of you know, I submitted a petition recalling the directors who were on the board and allowed management to run Denton County Electric Co-Op into a 1 Billion dollar bankruptcy in 2001-02. For that reason alone I believe these board members should be replaced, but there is more! Starting with the fact that the board is allowing CoServ to purchase real estate for development purposes. Isn’t that what got us in trouble before? I don’t know about you but I would much prefer that CoServ use that money to help lower our electric cost, especially in this economy. I mean isn’t “supplying electric as close to cost as possible” supposed to be the primary goal of CoServ’s management and directors?  Anyway back to the recall petition….CoServ sent me a letter claiming that my recall petition did not have enough valid signatures and they posted a notice their website saying the recall petition failed but they have refused to provide me with an accounting! I’ve asked President Mike Dreyspring for proof twice and I just sent the CoServ Board of Directors a letter asking them to require CoServ to provide me with the names and reason why each name was discounted from the recall petition. It will be nice if CoServ does the right thing and provides me the requested information immediately without legal intervention but I’m not real hopeful that will happen, you see CoServ is not big on transparency. It seems to me that CoServ has taken a page out of self proclaimed Iranian President Mahmoud Ahmadinejad’s play book, tell the opposition they lose but don’t give them proof. Yeah, Mr. Dreyspring, feed us some barbeque and propaganda mixed with just enough truth to be palatable and let’s call it a night, I mean an annual meeting.

Obviously the opinions stated in this blog are those of Diania Hanson and not necessarily the views of CoServ Watchdogs and/or its associates.

CoServ denied the Board Recall petition submitted by Diania Hanson on behalf of CoServWatchdogs.org in mid May, apparently for having too few valid signatures.

So the recall proceedings will NOT be scheduled for today’s Annual Meeting.

We will be collecting signatures, beginning immediately, for a new petition submission.¬† It’s important that the person(s) signing are the CoServ account holder – typically the person or persons listed on your bill.¬† If both a husband and wife are listed on the bill, then both should sign the petition *as one member*.¬† You should list your names *exactly* as they appear on your bill or membership certificate, letter for letter, period for period.

330 signatures were turned in – giving us a 10% buffer over the 300 required – but CoServ will use any imperfection to invalidate as many signatures as possible.¬†¬† We’ll have a much better buffer and will be more diligent on making sure that the signatures we collect this time are correct and valid.

Coserv’s “big sister”, Pedernales Electric Coop, is in the news again.¬† The Grand Jury which has been investigating it for possible criminal acts of the Board and upper management handed down indictments of former General Manager Bennie Fuelberg and former chief outside counsel Walter Demond this week.

There is speculation that this is just the first of a number of indictments.

See PEC4u.org for ongoing details, and the Austin American-Statesman for articles: Indictments issued in Pedernales Electric grand jury probe and Grand jury indicts former Pedernales leader, longtime lawyer.

It could happen here!

For Immediate Release
Contact: Tim Crouch 940-383-1990

16th District Court Judge Slams CoServ Electric in Class Action Suit

Denton, TX -  June 15,2009
Leaders of the effort to bring reform to CoServ Electric praised the decision of District Court Judge Jerry Woodlock today after he rejected an attempt by attorneys for Coserv to sever the class action case filed by reform director Mark Glover and additional CoServ members against the electric provider.¬† Judge Woodlock dealt an additional blow to CoServ’s attempts to delay action on the class claims when he set an August 31, 2009 trial date to hear both the original lawsuit and the putative class action suit.

The class action lawsuits on behalf of CoServ Electric’s over 140,000 member-owners are part of a nationwide rural electric cooperative movement aimed at reforming an industry that dates back to the days of Franklin Roosevelt’s New Deal.¬† “You are witnessing the birth of transparency and the rebirth of the cooperative electric revolution”, said CoServ Reform Director Mark Glover, “As before it’s about the rights of the member-owners to have cost-effective electric power and control over their own destiny.”¬† Reform advocates are calling for dramatic changes to laws governing rural electric cooperatives.

CoServ Electric was established in 1937 as the not for profit Denton County Electric Cooperative.¬† The company’s founding principle is to provide member owners with electricity at cost.¬† The national and statewide reform movement is challenging actions of electric cooperatives that have strayed from those founding principles and allowed cooperatives to enter into other for-profit business ventures.¬† Denton County Electric Cooperative changed its name to CoServ Electric in the 1990s as part of its new vision for a diversified electric cooperative, but was forced into $1 billion bankruptcy in 2001 after a series of failed for-profit businesses and speculative real estate investments.¬† Reformers say that CoServ has not reformed and continues to make risky investments that are outside of the principle of providing electric service to its members at cost.

“The primary issue of this class action suit is the fiduciary responsibility of CoServ Electric and its Board of Directors,” added Glover.¬† “CoServ is taking the member’s hard earned money without their knowledge or consent to make risky investments of the type that led to the bankruptcy only 8 years ago.”¬† Similar lawsuits are pending against other electric cooperatives in Texas, Arkansas, New Mexico and Tennessee.¬† Reform legislation passed in the Texas Senate during the 2009 legislative session but never reached a House vote due to partisan bickering on the Voter ID Bill.¬† Nationally, California congressman Henry Waxman has been conducting hearings on the industry and has indicated plans to file a reform bill on electric cooperative governance.

The August 31st trial date will be in Denton County’s 16th district court.¬† The case will be tried by visiting Judge Jerry Woodlock.

Is there a trend here? The basic issues are the same. Only the names and details change.

Man Sues Carroll Electric

Original article at  http://kthsnews.com/

By Richard Dean Prudenti
THE MORNING NEWS
BENTONVILLE — A Siloam Springs man has a gripe against Carroll Electric Cooperative, and in filing a lawsuit Wednesday claims the corporation has failed to refund more than $170 million in capital credits to past and present members.

Attorneys for former member Joe Capps filed the lawsuit in Benton County District Court, shortly after 4 p.m. Wednesday. The suit claims Carroll Electric has more than $170 million of “patronage capital” and requests the court order the cooperative to account for capital credits and retire them on a “reasonable and systematic basis.”

Carroll Electric is based in Berryville, with an office in Bentonville. The cooperative serves several counties in Arkansas and Missouri.

As a not-for-profit corporation, it cannot earn a profit, according to state and federal laws and the organization’s bylaws, the lawsuit reads. Any earnings exceeding operating costs and expenses belong to the patrons, and the cooperative is obligated to pay by credits to a capital account for each patron, the lawsuit claims.

Carroll Electric has not returned revenue to members in cash or in abatement of current charges for electric energy for more than a decade, the suit states.

“As a result of Carroll Electric’s interference with the owner’s right of control, the owners have been deprived of their property, profits that could have been obtained by the property, and Carroll Electric has been unjustly enriched,” according to the lawsuit. It goes on to say Carroll Electric should be retiring no less than approximately $8 million a year in capital credits, and this “is an indicator that Carroll Electric is hoarding money or wasting assets.”

The suit also claims violations of fiduciary duty, shareholder oppression and breach of contract, and Capps seeks recitation, interest, punitive damages, attorneys’ fees and other costs.

“The board of directors has irresponsibly endangered the cooperative’s tax-exempt status by retaining capital credits indefinitely,” the lawsuit states.

The suit also claims the cooperative excessively pays its nine directors. In 2007, each director earned about $2,700 per monthly meeting, for a total compensation of nearly $290,000 to the entire board.

“Overpayment is plain,” the lawsuit states.

For Immediate Release

Contact Diania Hanson at 214-215-4354 for additional information

CoServ Bankruptcy Directors Recalled

CoServ Watchdogs, the consumer advocate group for CoServ members, has filed a petition with the CoServ Corporate Secretary to recall four of seven Directors on the CoServ Electric Board.   The CoServ Bylaws allow for director’s recall with three-hundred CoServ members signatures on a petition.  CoServ Watchdogs filed three hundred and twenty seven names on the initial petition and plans to amend the petition with additional names in the coming weeks.

According to Coserv’s Bylaws, these directors will have a hearing to face charges of violating their fiduciary duties at the 2009 CoServ Annual Meeting.  The Annual Meeting will be held at the UNT Coliseum in Denton on Tuesday, June 23 at 5:30 PM.  An election to replace these directors will be held by mail-in ballot after the Recall Hearing.

CoServ Watchdogs has characterized   these four directors   as the “Bankruptcy Directors”   because they served on the Board of Directors that led CoServ into a $1 Billion Bankruptcy that began in 2001.   The Coserv Bankruptcy was caused by the non-profit board’s diversification into approximately twenty for-profit speculative investments including a golf course, hotel, telecom company, security company, internet company, and others.

CoServ Watchdogs claims the Bankruptcy Directors are again diverting member funds into speculative for-profit investments, instead of performing their fundamental duty of providing the members with electricity at cost.  “We need to clean up CoServ, like should have been done after the bankruptcy.  New brooms sweep best and it is time for some new directors that will be responsible and responsive to the members”, according Watchdog activist Diania Hanson.

Several Class Action Lawsuits have been filed by CoServ Members against CoServ management in the last few months.  These lawsuits allege that controlling board directors have wrongfully taken $54 million in member funds, placed member funds at risk, manipulated director elections, and operated in a culture of secrecy.

“This recall is about replacing the Bankruptcy Directors, lowering all of our electric bills, and gaining back our voice in the running of our electric cooperative”, according to Watchdog activist Diania Hanson.  “CoServ customers are the owners of CoServ and directors should focus on lowering our electric bills, not playing monopoly with our money.”   CoServ Watchdogs has more information available at www.CoservWatchdogs.org.

About CoServ Watchdogs:  CoServ Watchdogs is a consumer advocate group formed by CoServ Electric Members to “Return CoServ to Responsible Governance”.   CoServ members are the owners of the non-profit electric cooperative and annually elect directors to represent the member’s best interest.  CoServ Watchdogs advocates the member rights for fair and open director elections, open records, open meetings, and that Directors serve in the best interest of the members that elect them.  More information is available http://www.CoServWatchdogs.org/.

About CoServ Electric:  CoServ Electric is second largest non-profit electric cooperative in Texas with over $700 million in assets and 144,000 electric meters in North Texas.   CoServ was founded in 1937 under the name of Denton County Electric Cooperative, but now operates under the name of CoServ Electric.  Since an approximate $1 billion bankruptcy filed in 2001, CoServ has divested of various operations including a hotel, golf course, telecom company, internet company, security company, and other businesses.  CoServ maintains ownership in several for-profit businesses including CoServ Gas, Llano Utilities, and various real estate holdings.  CoServ operates in six North Texas Counties including Denton, Collin, Dallas, Tarrant, Wise, and Cooke counties.  The cooperative member- consumers of CoServ Electric are the owners of the cooperative and elect board directors annually to represent the member interests.  More information can be found at CoServ.com..

By:  Diania Hanson, CoServ Watchdogs, 214-215-4354

CoServ Watchdogs, the consumer advocate group for CoServ member/owners, held the first ever CoServ Candidate Forum on Friday, May 22 at Highland Village Council Chambers.  The debate will air on several local cable access channels.  Three challengers including Mary Sue Friesenhahn Richard Yerxa and Mark Pape attended and reponsibly answered the tough questions of moderator Bob Wier.  The incumbent director, Ann Vaden chose not to attend and answer for her record as a CoServ Director.

The three challengers discussed important issues such as open records, open meetings, transparency, fair elections, and much more.  Several Class Action Lawsuits against the controlling directors and management has brought these issues to light.  Member lawsuits allege that controlling board directors have wrongful taken $54 million in member funds, placed member funds at risk, manipulated director elections, and operated in a culture of secrecy.

The debate was initially scheduled for Thursday night, but changed to Friday in hopes that Ms. Vaden, the incumbent, would attend.  She had more important places to be on both nights, and clearly felt that she is above having to openly discuss CoServ issues for the benefit of the members that own CoServ.

Ms. Vaden did find time in her busy schedule to write letters to the editor blasting the Whistleblower Director that has made members aware of her mismanagement.  She also blasted member advocates with CoServ Watchdogs.

Here is a message for Ann:  You are running for director against Mary Sue Friesenhahn Richard Yerxa and Mark Pape.  CoServ Watchdogs or the Whistleblower Director that exposed your mismanagement are not running for director.   Maybe you should face your competition and find the courage to address the real issues in this director election.

CoServ Members can vote in this election starting this week.  Ballots are in Texas Coop Power Magazine that will be mailed to your home.  Please vote and return CoServ to responsible governance.

About CoServ Watchdogs:  CoServ Watchdogs is a consumer advocate group formed by CoServ Electric Members to “Return CoServ to Responsible Governance”.   CoServ members are the owners of the non-profit electric cooperative and annually elect directors to represent the member’s best interest.  CoServ Watchdogs advocates the member rights for fair and open director elections, open records, open meetings, and that Directors serve in the best interest of the members that elect them.  More information is available <http://www.coservwatchdogs.org/>www.CoServWatchdogs.org ..

CoServWatchDogs is hosting a candidate forum:

Friday, May 22 at 7 pm in Highland Village City Council Chambers

Get to know your candidates

CoServ Director Candidate Forum
Friday, May 22, 2009 at 7 p.m.
Highland Village City Council Chambers
City of Highland Village Municipal Complex
1000 Highland Village Road, Highland Village, Texas 75077
Bob Weir will be the moderator.
Half the questions will be asked by Bob and the other half will come from the audience.

This forum will be transmitted live over Highland Village Cable – Channel 16 on Time Warner and Channel 43 on Verizon. A DVD of the forum will be made for us so that other member city cable channels will be able to carry the forum.

I don’t know about you but I’m tired of Executives and Elected Leaders, most of whom are looking out for #1, telling me to trust them they are doing the best they can. Well, you know what? Trust is earned! And, it exhausts me just thinking about the bail out’s and rescue’s and executives who can afford private planes but still need our money. And don’t get me started on the fund managers and executives, who were selling/trading/verifying & rating a product that would collapse like a house of cards in a hurricane. I am amazed that they were all “lucky” enough to cash out just in time and now have enough money to live on till Jesus comes!

To be clear, I believe you work, take the risk and if you make a profit it should be yours. Of course, I think you should pay taxes on what you earn but I also think the government should be responsible with our tax money. No one wants to work hard to pay taxes and feel like they would be better having a bonfire with their cash because at least you‚Äôd get the smores! I can‚Äôt figure out why an investment firm can hire an accountant who can spot a Ponzi scheme like Madoff‚Äôs ‚Äúin less than ONE day” but our government doesn‚Äôt have ONE employee who can recognize fraud when they have informants pointing the way, more than once!

North Texas is not Washington or Wall Street but we have a company, our own Denton County Electric Company dba CoServ, right here in our back yard who has engaged in questionable practices like

Giving CEO Dreyspring a raise this year and he gives his five (5) VP‚Äôs raises & bonuses! With compensation between $163,000 and $300,000+ THE COSERV EXECUTIVES GOT RAISES & BONUSES, THIS YEAR, IN THIS ECONOMY!! Just a thought but could we get by with 4 VP’s and move one of them into CEO? That would save $300,000++ right off the bat and is of course if they are able, qualified, et cetera, but you would hope as Vice President’s one of them would be capable of running the company, right? To be clear, I don‚Äôt have a problem with giving your workers incentive pay but executives in my opinion should have their salaries frozen. The exception in my mind would be if an executives division is efficient and is making profits which lower our bills or could be used to do so. Like I said I‚Äôm all for profiting off your hard work and if doing your job well will make my bill lower I‚Äôm for it!

Spinning off companies that have nothing to do with providing electricity so that CoServ can invest in speculative real estate and for-profit businesses. We all know that most businesses don’t make a profit at first so who do you think supplemented those losses if they occurred? Right, YOU as CoServ did! I do not know the exact figures or extent of financial dealings but when I get these figures I will post them on our website.

Discounting its member’s capital credits without member approval and thus retiring about 54 million of YOUR money!

Spending 3 million dollars marketing when CoServ has a monopoly. Where does it go? Who gets the benefit the news papers, schools, or someone else?

Giving out what I call “filtered information” meaning they tell us what they want us to know without all the facts. For instance, I was told that CoServ’s rate’s were lowest and sent to the website to see a graph that shows CoServ is lowest by 2 cents. But did they list all the provider companies and is CoServ’s rate lowest? I don’t think so I think our rates should be lower because as a non-profit they do not pay shareholders dividends or taxes!

Giving its board members voting lists but denied them to challengers during elections. Also, discussing or planning a board members resignation date to be after elections so they can appoint the candidate of THEIR choice.

Scripting and/or approving by laws that give MORE control to the Board and/or Management and less to the members.Trust me, I could go on and on but you get the idea.

If you have CoServ Electric you are a member!

And if you are a member you can vote.

CoServ has 7 directors, 4 of whom were on the board when it expanded itself into bankruptcy to the tune of almost 1 Billion Dollars in 2001-2002. One of them has been on the board for about 17 years! We need these directors recalled and made to stand for re-election. Make them tell you how they voted and why and give you a choice between them and someone else.

Watchdogs will be set up to get the recall petitions signed tonight (Thursday) from 6 pm until ? at the baseball fields behind Briarhill Middle School. Please come sign a petition we need to turn them in tomorrow!

CoServ needs a open meetings and records, a set of bylaws that protect the members, a board of directors to oversee and act on the member’s best interest and not the best interest of the management or themselves if they are conflicted. CoServ needs its management to be open, diligent and committed to its members, running the company it was formed to run, a company dedicated to providing electric service at the lowest possible rate to its members while providing excellent customer service.

Is this asking too much??

Well, I don’t think so, but I’ve been wrong before!

~Diania

BTW:

I have no issues with the CoServ Employees just it’s some of it’s Executives & Board.

You can go to the BIG ISSUES tab for more details on the items I discussed here and if you want to know the names of the companies CoServ is/was using to buy property and such you should be able to find it in the 54 million dollar lawsuit and CoServ’s form 990 from 2007 has figures including Executive and Board compensation. The 990 for 2008 I’m told won’t be available until August.

FYI, the following will be on the ballot for Board of Director seats this June

District 1 Candidate

Vaughn Andrus, vandrus@coserv.com

District 5 Candidates

Anne Vaden – avaden@coserv.com
Mary Sue Friesenhahn – marysuemarketing@yahoo.com, 972-317-3218
Mark Pape – mark.pape@cabrillotech..com, 940-455-2735
Richard Yerxa – richardyerxa@pwhome.com, 214-739-3906

CONTACT THEM! Ask them your questions! Be an informed voter.

We’ve just posted a revised version of the earlier “Bankruptcy Director “Recall Petition.

See our earlier post for the details…¬† Why, who, how…

FYI, the following will be on the ballot for Board of Director seats this June

District 1 Candidate

Vaughn Andrus

District 5 Candidates

Anne Vaden
Mary Sue Friesenhahn
Mark Pape
Richard Yerxa

We’ll be posting more details soon – we’re currently checking with the candidates as to which of their contact info they’d like to include here, if any.

Of course, we think that all the candidates and sitting Directors should be accessible to the Coop’s member/owners.

The Texas Senate voted to adopt SB 921 (aka, the Fraser/Rose Bill), mandating open meetings, open records, and fair elections for electric coops statewide.

The Texas House is still working on it, with two competing bills (see the April 6th post on HB 1390, HB 3820, below).

The PR flacks at CoServ have been hard at work to make last Thursday’s hearing with director Mark Glover look like a victory, but it rings pretty hollow here.

What they really wanted of course was to see Glover charged with contempt of court for not turning in his computer by their impossible to achieve deadline. Didn’t happen.

If you read their account of it they got a big win in having Glover agree to turn over his phone, computer, and some paperwork, and getting the extension of the temporary restraining order so that he won’t continue to release voter lists and the name of the shadow company they use to do their real estate speculation.

Turning over the goods is no big deal to Glover. The annoyance of not having them for a few days is probably the main issue there. Maybe they’ll find out the shocking news (!) that he passed his copy of the voter list (which all the incumbents in the 2008 election had) to challenger Brady so she’d be playing on a level field (and which he already admitted to doing). And pictures of his dog or something equally exciting….

The temporary restraining order? That voter list cow has been out of the barn since last year. What would be the point of handing out more copies? The whole point of releasing it was to drive the point home that the Board doesn’t play fair with the election process – giving obvious advantage to incumbents by handing out voter lists to them while denying them to challengers.

The name of the shadow real estate company is out too (revealed in the lawsuit). Are there other shady dealings that he knows about that CoServ feels the need to keep secret from their member-owners? If so, what are they so keen to hide, and why? Could it be that they’re playing fast and loose with the member-owners’ money, lining their own pockets and those of their friends?

Did they mention that Glover’s side won a change from the visiting judge who didn’t have enough local knowledge to distrust their story to one who serves this area and might have a clue about what’s really going on? Nope. Did they mention that they gave Glover a copy of the voter list in 2002, unasked for, shortly after he joined the Board? Nope.

CoServ’s real problem of course is that they app0inted someone with some ethics and a spine to serve on the board back in 2002, and when he didn’t like what he saw he tried to make changes, rather than just take the payola and play along like the rest of them do.

Now they’re making lots of noise to distract attention from the fact that there are big problems in the way that CoServ is run. Hey, let’s go shoot a messenger!

If you read through the information posted recently regarding SB 921, a Bill that would give electric co-op members some protection, here‚s some more information you need to know.  House Bill 1390 is identical to Senate Bill 921.  Another Bill, House Bill 3820, is similar, but offers considerably less protection to co-op members.

Both HB1390 and HB 3820 are scheduled to be heard on Tuesday by the House State Affairs Committee.  That meeting will be in room 140 of the Reagan Building (on 15th Street, immediately to the NW of the Capitol) beginning at 2 pm or upon adjournment of the House Session.  HB 3820 is included below, so you can compare it with SB921/HB1390.

In this newer Bill, HB 3820, you will note that you, as a member of the co-op, will be entitled to much less information than under the other Bills.  You are also entitled to attend not the entire meeting of your Board, but only for the duration of the period specified in the meeting notice for member comments.  Non-members are not entitled to attend.

If you want to complain about something going on at your co-op, you are limited to certain issues.  If you are not satisfied with the response to your complaint, you can then complain to the Attorney General.  The AG can then respond to you, if the AG decides it is in the public interest to respond.

If you want to view this committee meeting, click on http://www.capitol.state.tx.us/ Then, click on “House” video broadcasts under Legislative Activity.¬† Look for the State Affairs Committee broadcast and click on that.

Thanks to Carlos Higgins of PEC4U.org for these reviews and links.

This information is all about the proposed legislation that would affect electric cooperatives – especially Pedernales Electric Cooperative (the only Coop in the state with over 210,000 members), though many of the provisions would naturally affect CoServ as well.

This Bill is scheduled to be considered by a Senate committee on Tuesday.

Committee: Business & Commerce
Location: Betty King Committee Room
Chair: Senator Troy Fraser
9:00 AM, Tuesday, April 07, 2009

This Committee meeting room is small, and it will likely be packed. 20 Bills are scheduled to be heard, including Senate Bill 921, which was filed in response to the failures at the PEC under Gen. Mgr. Fuelberg and complaints about other Texas electric cooperatives such as CoServ.

SB 921 Fraser
Relating to access by the members of electric cooperatives to meetings of the boards of directors and certain information of the electric cooperatives.

The Bill is shown below. If you plan to watch the hearing on this Bill, you will, of course, be better prepared to understand the various arguments that will be made if you take time to read the Bill in advance. Most likely, there will be considerable opposition. Some of the opposition may be from our own PEC, even though this Bill is in the interest of our PEC members.

If you want to watch this hearing on your computer, here’s how:
Next Tuesday, just before 9 am, click on
http://www.senate.state.tx.us/bin/live.php
When that window pops up, scroll down and click on the Betty King Committee Room. You should get the video for that hearing. Caution: It may be a long time before the committee gets to SB 921. Bills are not always taken in the order they appear on the schedule, the time it takes for any one Bill is not predictable, and the hearing will be recessed when the Senate is in session. Also, there is always the possibility the hearing will be moved to a larger meeting room.

But if you are determined to see this, it will probably be helpful for you to make a practice run on Monday. Click on http://www.senate.state.tx.us/bin/live.php during the day, and try any of the selections, after the starting times indicated, and see what you get. You can watch the House session or House committees by going to
http://www.house.state.tx.us/media/welcome.php and exploring. All previous broadcasts are archived, and you can also view those.

The Legislature does a good job of showing what they are doing and what they have done, on the Internet. Try it!

Regards

Carlos Higgins, PEC member
CarlosTX@sbcglobal.net

81R7843 TRH-D
By: Fraser S.B. No. 921

A BILL TO BE ENTITLED
AN ACT
relating to access by the members of electric cooperatives to meetings of the boards of directors and certain information of the electric cooperatives.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 161.002, Utilities Code, is amended by adding Subdivision (2-a) to read as follows:
(2-a) ”Board meeting” means a deliberation between a quorum of the voting board, or between a quorum of the voting board and another person, during which electric cooperative business or policy over which the board has responsibility is discussed or considered, or during which the board takes formal action. The term does not include the gathering of a quorum of the board at a social function unrelated to the business of the cooperative, or the attendance by a quorum of the board at a regional, state, or national convention or workshop, ceremonial event, or press conference, if formal action is not taken and any discussion of cooperative business is incidental to the social function, convention, workshop, ceremonial event, or press conference.
SECTION 2. Section 161.064(b), Utilities Code, is amended to read as follows:
(b) The bylaws may contain any provision for the regulation and management of the affairs of the electric cooperative that is consistent with the articles of incorporation and this chapter.
SECTION 3. Section 161.072, Utilities Code, is amended by adding Subsections (c) through (m) to read as follows:
(c) Director elections shall be conducted in a manner that is fair and open to all members of the electric cooperative.
(d) A board committee of a cooperative with more than 210,000 members may not cast a member’s proxy vote in a director election.
(e) A director who is standing for reelection to the board of a cooperative with not more than 210,000 members may not serve on a committee established under the bylaws for the purpose of casting, or being authorized to cast, the proxy vote of a member in a director election.
(f) A member’s proxy vote may be cast in a director election only if:
(1) a proxy form is sent by regular mail to each member of record not later than the 30th day before the date of the meeting at which proxy votes are counted;
(2) the proxy form designates each candidate who is an incumbent director;
(3) an exact copy of the proxy form is posted on the cooperative’s Internet website, if the cooperative maintains a website;
(4) the proxy form includes information describing the process by which proxy votes are authorized and cast, including:
(A) the name of each member of the committee, if any, established under the bylaws for the purpose of casting proxy votes in a director election;
(B) the process prescribed in the bylaws for selecting members to serve on the committee; and
(C) the districts represented by each committee member, if applicable; and
(5) the proxy form contains the following statements, in bold type:
(A) ”If you grant the committee your proxy, you are giving the committee full authority to vote your proxy for the candidates you selected, or, if you did not select any candidates, to vote your proxy for candidates the committee selects”;
(B) ”You may rescind your proxy at any time before votes are cast at the meeting to elect directors”; and
(C) ”State law prohibits any person from using incentives or other enticements to encourage you to provide your proxy in any board election.”
(g) Subsections (d) and (f) may not be construed as limiting the right of an individual member to collect or cast the proxy votes of another member in a director election, if allowed by the bylaws.
(h) This section may not be construed as limiting the use of a proxy as provided by Section 161.069 to establish a quorum to transact business other than the election of a director.
(i) A person may not use an incentive or other enticement to encourage a member to authorize another person to cast the member’s proxy vote in a director election.
(j) A cooperative with more than 210,000 members may elect directors only by district. A member may vote for a director to represent a district only if the member resides in that district.
(k) A cooperative with more than 210,000 members may nominate qualified members as candidates in a director election only through a written petition by members. The bylaws must:
(1) specify the number of printed names and dated signatures a petition nominating a candidate must contain;
(2) specify a period within which a petition nominating a candidate must be submitted to the cooperative; and
(3) specify that only members residing in a district may sign a petition for the nomination of a candidate to represent that district.
(l) If the bylaws of a cooperative with not more than 210,000 members allow a committee of members to nominate qualified members as candidates in a director election, the bylaws must also:
(1) allow nominations to be made through one or more written petitions by members;
(2) specify the number of printed names and dated signatures a petition nominating a candidate must contain; and
(3) specify a period within which a petition nominating a candidate must be submitted to the cooperative.
(m) A petition submitted under Subsection (l) must provide on the petition the name and address of the member seeking nomination and, if the cooperative nominates or elects directors by district, the district the member seeks to represent.
SECTION 4. Section 161.075, Utilities Code, is amended to read as follows:
Sec. 161.075. BOARD MEETINGS. (a) The board shall hold a regular or special board meeting at the place and on [the] notice as provided by Section 161.0751 and [prescribed by] the bylaws. Except as provided by Section 161.0752, each member of the electric cooperative is entitled to attend a regular or special board meeting.
(b) The attendance of a director at a board meeting constitutes a waiver of notice to the director of the meeting unless the director attends the meeting for the express purpose of objecting to the transaction of business at the meeting because the meeting is not lawfully called or convened.
(c) A notice or waiver of notice of a board meeting given to a director is not required to specify the business to be transacted at the meeting or the purpose of the meeting.
(d) The board shall keep a record of each regular or special board meeting, in the form of written minutes or a taped recording of the meeting. A record of a meeting must state the subject of each deliberation and indicate each vote, order, decision, or other action taken by the board. The board shall make meeting records available to a member for inspection and copying on the member’s written request to the board secretary or to a person the secretary designates.
(e) A member attending a regular or special board meeting may record all or part of the meeting by any means of audio or visual reproduction, including a tape recorder or video camera.
(f) The board may adopt reasonable rules to maintain order at a regular or special board meeting, including rules relating to the location of recording equipment and the manner in which recording may be conducted. A rule adopted by the board under this section may not prevent or unreasonably impair a member from exercising a right granted by this section.
SECTION 5. Subchapter B, Chapter 161, Utilities Code, is amended by adding Sections 161.0751 and 161.0752 to read as follows:
Sec. 161.0751. NOTICE OF BOARD MEETINGS. (a) The board shall give members and the media written notice of the date, hour, place, and subject of a regular or special board meeting. Notice of a board meeting must be given at least 72 hours before the scheduled time of the meeting by:
(1) posting a notice on a bulletin board in a place convenient to members, at the electric cooperative’s headquarters and at each district office;
(2) posting a notice on the cooperative’s Internet website, if the cooperative maintains a website; and
(3) sending a notice by electronic mail to members of the media who, before the time notice is required by this section, requested notification of meetings.
(b) If the board recesses a regular or special board meeting to continue the following regular business day, the board is not required to post notice of the continued meeting if the recess is taken in good faith and not to circumvent this section and Section 161.075. If a regular or special board meeting is continued to the following regular business day, and on that following day the board continues the meeting to another day, the board shall give written notice as required by this section of the meeting continued to that other day.
(c) In the event of an emergency or urgent necessity that requires immediate board action to meet a reasonably unforeseeable situation, notice may be given in the manner prescribed by Subsection (a) at least two hours before a regular or special board meeting is convened, in order to:
(1) call an emergency board meeting; or
(2) add a subject to the agenda of a previously scheduled board meeting.
(d) Notice under Subsection (c) shall clearly identify the emergency or urgent necessity for which the notice is given. If the board adds a subject to the agenda of a previously scheduled regular or special board meeting, the board secretary or person the secretary designates shall post a copy of the revised agenda on the electric cooperative’s Internet website, if the cooperative maintains a website, and physically at the cooperative’s headquarters and each district office, not less than two hours before the meeting convenes.
(e) If, at a regular or special board meeting, a member makes an inquiry regarding a subject for which notice has not been given as required by this section, the notice provisions of this section do not apply to:
(1) a statement by the board of specific factual information given in response to the inquiry; or
(2) a recitation of existing policy in response to the inquiry.
(f) Any deliberation of or decision relating to the subject of an inquiry made under Subsection (e) shall be limited to a proposal to place the subject on the agenda for a subsequent board meeting.
Sec. 161.0752. EXECUTIVE SESSIONS. (a) Before the board calls an executive session, the board shall convene in a regular or special board meeting for which notice has been given as provided by Section 161.0751. During that board meeting, the presiding director may call an executive session by announcing that an executive session will be held to deliberate a matter described by Subsection (d) and identifying the specific subdivision of Subsection (d) under which the executive session will be held.
(b) Except as provided by Subsection (c), a final action, decision, or vote on a matter deliberated in an executive session may only be made in a regular or special board meeting for which notice has been given as provided by Section 161.0751.
(c) The board may take action in an executive session for matters described by Subsections (d)(2), (4), and (5).
(d) The board may hold an executive session to which the members do not have access to deliberate:
(1) anticipated or pending litigation, settlement offers, or interpretations of the law with the electric cooperative’s legal counsel and with any other person the board considers necessary;
(2) the purchase, exchange, lease, or value of real property, if the board determines in good faith that deliberation in an open board meeting may have a detrimental effect on the electric cooperative;
(3) business and financial issues relating to the negotiation of a contract, if the board determines in good faith that deliberation in an open board meeting may have a detrimental effect on the position of the electric cooperative;
(4) personnel issues, and complaints or charges against a director or electric cooperative employee or consultant, unless the director or employee who is the subject of the deliberation requests a public hearing;
(5) utility-related matters and commercial information that the board determines in good faith are related to the electric cooperative’s competitive activity but only to the extent the board specifically determines that disclosure of the information could give an advantage to competitors or potential competitors; or
(6) issues related to security of the electric cooperative, including security personnel, security devices, and security audits.
(e) The board secretary or a person the secretary designates shall make and keep a written or audio record of each executive session. The secretary shall preserve the record for at least two years following the session. The record must include:
(1) a statement of the subject matter of each deliberation;
(2) a record of any further action taken; and
(3) an announcement by the presiding director at the beginning and end of the session indicating the date and time.
SECTION 6. Section 161.077, Utilities Code, is amended by adding Subsection (d) to read as follows:
(d) The provisions of this chapter that apply to the board also apply to the executive committee.
SECTION 7. Subchapter B, Chapter 161, Utilities Code, is amended by adding Sections 161.080, 161.081, 161.082, and 161.083 to read as follows:
Sec. 161.080. MEMBER’S RIGHT OF ACCESS TO RECORDS. (a) Except as provided by Subsection (c), a member of an electric cooperative may, at any reasonable time and on written request that states the purpose of the request:
(1) inspect books and records of the cooperative relevant to that purpose; and
(2) at the member’s own expense, copy records the member is entitled to inspect under this section.
(b) An electric cooperative may charge a reasonable fee to the member if fulfilling the member’s request will require a large amount of employee time.
(c) An electric cooperative may reject or limit a member’s request to inspect its books and records if:
(1) the member refuses to warrant and furnish to the electric cooperative, on the electric cooperative’s request, an affidavit that:
(A) the inspection is desired for a purpose reasonably related to the business of the cooperative; or
(B) the member does not intend to sell or offer to sell any list of members of the cooperative or assist another person in obtaining a list of members for that purpose;
(2) the release of the information sought by the member, such as individual member information or personnel information, would unduly infringe on or invade the privacy of a person;
(3) the inspection is sought for a dishonest purpose; or
(4) the records sought to be inspected pertain to trade secrets or information that is privileged, confidential, or proprietary.
Sec. 161.081. POLICIES AND AUDITS. (a) The board shall adopt written policies relating to:
(1) travel expenditures for board members, officers, and employees;
(2) reimbursement of expenses for board members, officers, and employees;
(3) conflicts of interest for board members, officers, and employees;
(4) whistleblower protections;
(5) criteria and procedures for the selection, monitoring, review, and evaluation of outside vendors or contracted professional services;
(6) budgets for use in planning and controlling costs; and
(7) the creation of a committee that audits the actions of the board.
(b) A cooperative shall provide for an independent financial audit, to be performed annually by an unaffiliated entity that is professionally qualified to perform such an audit.
(c) The state auditor may audit the financial transactions and operations of a cooperative, at the cooperative’s expense.
Sec. 161.082. COMPLAINTS BY MEMBERS. (a) In this section, “commission” means the Public Utility Commission of Texas.
(b) A member may file a written complaint with the general manager of the cooperative if the member is aggrieved by an action of the board or by an employee of the board or of the cooperative that the member alleges infringes on a right of the member under this chapter.
(c) Not later than the 20th day after the date the general manager receives a complaint under Subsection (b), the general manager shall take corrective action regarding the complaint, if the general manager determines that the action complained of infringed on the member’s rights under this chapter.
(d) If the general manager determines that the action complained of did not infringe on the member’s rights under this chapter, or if the general manager otherwise fails to resolve the member’s complaint to the member’s satisfaction before the 21st day after the general manager receives the member’s complaint, the member may file a written complaint with the commission. A complaint filed with the commission under this subsection must:
(1) identify the electric cooperative by name and address;
(2) describe in detail the nature of the member’s complaint; and
(3) include copies of documents relevant to the member’s complaint, including:
(A) any relevant written request made by the member to the cooperative;
(B) the written complaint made by the member to the general manager under Subsection (b); and
(C) any relevant response from the cooperative regarding a request or complaint.
(e) In reviewing a member’s complaint under this section, the commission may request that the cooperative provide to the commission any information relevant to the complaint. The commission must give a cooperative a reasonable opportunity to inspect and copy the requested information before providing the information to the commission. The commission shall designate an employee of the commission to be the person responsible for receiving, inspecting, or copying information received under this subsection.
(f) An electric cooperative shall cooperate with a request for information under Subsection (e) and promptly provide the requested information to the commission’s designated employee. The commission may not disclose to any person information provided by a cooperative in response to the request unless:
(1) the commission is required by a court to provide the information to the person;
(2) the person is an authorized employee of the commission; or
(3) the cooperative that provided the information consents to the disclosure.
(g) The commission shall give a cooperative notice before using information provided in response to a request under Subsection (e) in a contested case hearing. On objection by the cooperative that the information is confidential or sensitive, the administrative judge presiding over the contested case hearing shall determine whether the information is admissible in the hearing.
(h) The commission shall return to a cooperative any information provided under this section that is confidential or sensitive to the cooperative.
Sec. 161.083. ALTERNATIVE DISPUTE RESOLUTION. The Public Utility Commission of Texas may refer a complaint made under Section 161.082(d) to the State Office of Administrative Hearings as provided by Section 14.0025 for alternative dispute resolution if the commission determines a referral is in the public interest.
SECTION 8. Subchapter C, Chapter 161, Utilities Code, is amended by adding Sections 161.126 and 161.127 to read as follows:
Sec. 161.126. PROHIBITION ON ACQUISITION OF GENERATOR CAPACITY BY CERTAIN ELECTRIC COOPERATIVES. An electric cooperative with more than 210,000 members that provides retail electric service may not acquire equipment capable of generating electricity for sale unless the Public Utility Commission of Texas first approves of the acquisition. The commission by rule shall establish the standards and procedures by which it will approve an electric cooperative’s acquisition of electric generation capacity.
Sec. 161.127. NOTIFICATION OF CERTAIN INVESTMENTS. Not later than the 30th day following the completion of a transaction that results in a cooperative or an affiliate of the cooperative creating, acquiring, or receiving an interest in an entity that does not generate, transmit, or distribute electricity, the cooperative shall provide a notice to members that contains:
(1) the name of the entity;
(2) a description of the entity;
(3) the reasons for the decision to enter into the transaction;
(4) a description of the costs associated with the transaction, and the method of financing for those costs; and
(5) a description of the anticipated effect the transaction will have on the cooperative’s electric energy rates or prices.
SECTION 9. (a) The changes in law made to Section 161.072, Utilities Code, as amended by this Act, apply only to a director election held on or after the effective date of this Act. A director election held before the effective date of this Act is subject to the law in effect on the date the election is held, and that law is continued in effect for that purpose.
(b) The changes in law made by Section 161.075, Utilities Code, as amended by this Act, and by Sections 161.0751 and 161.0752, Utilities Code, as added by this Act, apply only to a meeting convened on or after the effective date of this Act. A meeting convened before the effective date of this Act is subject to the law in effect on the date the meeting is held, and that law is continued in effect for that purpose.
(c) The changes in law made by Sections 161.080, 161.082, and 161.083, Utilities Code, as added by this Act, apply only to a request to inspect records submitted on or after the effective date of this Act. A request submitted before the effective date of this Act is subject to the law in effect on the date of the request, and that law is continued in effect for that purpose.
(d) The changes in law made by Section 161.127, Utilities Code, as added by this Act, apply only to a transaction that is completed on or after the effective date of this Act. A transaction that is completed before the effective date of this Act is subject to the law in effect on that date, and that law is continued in effect for that purpose.
SECTION 10. This Act takes effect September 1, 2009.

See also: Mark Glover’s comments on SB 921 to Fraser. (MS Word doc)

From the CoServ Bylaws:

SECTION 4.9. Removal of Director by Members.
Any member may bring charges against a director and, by filing with the secretary such charges in writing together with a petition signed by at least ten (10) per cent of the members or 300 members, whichever is the lesser, may request the removal of such director by reason thereof. Any decision on the removal of a director pursuant to this Section 4.9 shall be made at the next annual meeting of the members or at a special meeting of the members called for the purpose of making such decision. Such director shall be informed in writing of the charges at least thirty (30) days prior to the meeting of the members at which the charges are to be considered and shall have an opportunity at the meeting to be heard in person or by counsel and to present evidence in respect of the charges; and the person or persons bringing the charges against the director shall have the same opportunity. The question of the removal of such director shall be considered and voted upon at the meeting of the members and any vacancy created by such removal may be filled by vote of the members at such meeting without compliance with the foregoing provisions with respect to nominations. In the event that the vacancy is not filled at such meeting, then the vacancy shall be filled at a special meeting called for such purpose and in accordance with Sections 4.7 and 4.8 of these Bylaws. In the event that the vacancy has not been filled within 100 days, then the vacancy may be filled in accordance with Section 4.10 of these Bylaws. Nothing herein shall be construed to waive the residency or other qualifications of a director as set forth in Section 4.6 of these Bylaws.

(emphasis added)

Yes, CoServ member-owners can remove the “Bankruptcy Directors” – those four whose bad decisions helped put CoServ into bankruptcy in 2002 and continue to “serve” the membership with similarly bad decisions. Yes, it only takes a petition of 300 members to start the process.¬† You can be one of those 300 right now, just download and fill out the petition below (please also let us know that you’ve done so – we’d like to keep track of how quickly we reach the 300 and how far we overshoot that goal).

Petition to Remove Bankruptcy Directors (PDF)

In an unsurprising turn of events, CoServ sued whistleblowing Board member Mark Glover on Monday, March 23.

What is mildly surprising is how they set it up so that he couldn’t possibly comply with the district judge’s order to turn over his computer by March 26 (see Motion for Expedited Discovery, pg 5), as he was out of town on CoServ business – with the flights arranged by CoServ – from the time of the order until after hours on the day of the deadline.¬† He was served with the paperwork at baggage claim, so they obviously knew where he was.

In addition to the physical impossibility of delivering the computer by close of business (5:30pm) when it was known that Glover’s flight wouldn’t land until after that time, the address given in the Temporary Restraining Order for Alvarez and Marsal on Carpenter Street is out of date as the company has moved.¬†¬† Even if Glover had attempted to deliver the computer on time he would not have been able to at that location.

Also note that either CoServ was spreading misinformation or that the Denton Record-Chronicle reporter wasn’t paying close attention to the details for the article which ran on Sunday, Mar 29, prominently titled “Board Member Misses Deadline”.¬† The paper refers to Glover in the first sentence as a “former CoServ Electric board member”, though he had not resigned his post and the bylaws still state that only the members, not the board, may remove a board member.

The newspaper also incorrectly states that “Glover and two other members” sued CoServ last month.¬† Glover is not a party to the suit, though he did act as a whistleblower in providing background information for the suit.

Finally, the paper states that the matter is scheduled for another hearing on Tuesday.¬† We’re not lawyers here, but our reading of the Motion for Expedited Discovery states on page 2 that Glover is to produce certain documents “within seven days of service of this Order” (emphasis added).¬† Since Glover was not served notice until March 26, the clock technically starts on that date, does it not?

And now the legal wrangling really begins in earnest…

CoServ’s Petition for Temporary Restraining Order

Granted-Temporary Restraining Order Against Glover

Granted-Motion for Expedited Discovery

Denton Record Chronicle article

For Immediate Release
Contact Diania Hanson with CoServ Watchdogs for additional details
214-215-4534

CoServ owned construction company, Llano Utilities, has engaged in questionable practices with CoServ member funds, according to a source that is close to Llano.  This source asked to remain anonymous with information provided to CoServ Watchdogs, the consumer advocacy group formed by CoServ members.

Llano has regularly entertained clients at Topless Strip Clubs, Bars, and company paid Deer Hunting Leases, according to this source.   Drunken parties for clients have been a regular sales gimmick for marketing Llano services.  CoServ is the majority owner of Llano and has heavily funded operation of Llano with CoServ member funds.

When CoServ director and whistleblower Mark Glover was asked about the matter, he said he had heard parts and pieces of the story, but that CoServ management filtered the details given the CoServ Board.  “I have heard Mike Dreyspring, CoServ’s CEO, fondly refer to this strip club matter as Tittygate”, accordingly to Glover.  “I have tried to find out more, but CoServ management has not been forthcoming with details and just says they have corrected the matters”, Glover stated.

Spending CoServ money at topless strip bars is unacceptable and why CoServ needs transparency and reform, according to CoServ Watchdogs.  We have to assume there are a lot more details we don’t know about and hope the attorneys suing CoServ for the members can expose wrongdoing and help the members stop this type of corruption.

Members of CoServ Electric, filed a class action lawsuit against CoServ in February. The lawsuit alleges that the co-op has wrongfully taken $54 million of the members’ money. The suit also alleges that controlling directors of the cooperative’s board have placed the members’ funds at risk in for-profit business endeavors, subverted democratic control of the co-op and conducted their operations in a culture of secrecy.

CoServ Watchdogs is a consumer advocacy group formed by CoServ members.  Members of CoServ are also the consumer-owners of the cooperative.  CoServ Watchdogs is trying to restore their rights as members to democratically control their cooperative. For more information on CoServ Watchdogs, go to www.CoServWatchdogs.org.

Cobb EMC, an electric coop in the Atlanta, GA area, is back in court.

A settlement was handed down in December in a member-lead lawsuit which alleged asset siphoning and insider dealing.  They were ruled in violation of that settlement the next month.

The court ordered a special election regarding mail-in voting, and said that the plaintiffs should draft the language. The coop drafted its own and made other by-law changes that affect the coop’s governance.

The plaintiffs also want to ban the use of Coop resources to back or oppose candidates.¬† The existing board doesn’t agree.

Of course not.  Silly members.

Sound familiar, CoServ?

Read the article (PDF) from the Atlanta Constitution-Journal