PEC Board Lines Up Against Sale To New Jersey Company – Who Knew?

Other news: Customer-members used 500 million kilowatt-hours in July '08, a 22% increase over last year, and PEC's traditional annual picnic and Christmas party are cancelled

September 16, 2008

MEDIA CONTACT: Anne Harvey, (830) 868-4933; Austin line, (512) 219-2602

JOHNSON CITY – At its Sept. 15 meeting, the Pedernales Electric Board of Directors, with full support of the members in attendance, unanimously voted to approve a “declaration that PEC is not for sale.” The declaration supports General Manager Juan Garza’s earlier actions in declining an offer submitted in August to purchase PEC.

“This is certainly not anything even worth considering,” stated PEC District 7 Director Dr. Patrick Cox. “I think we’re going to very definitively say today, when we take this vote, we are definitely opposed, in all shapes, forms and fashions, to any proposal to sell Pedernales Electric Co-op.”

PEC Board President R.B. Felps agreed. “We were elected to run the business; we were not elected to sell it,” Felps said.

Garza recently received an offer by letter from New Jersey-based Quentin Capital Management LLC to purchase the Cooperative, which he turned down Aug. 22 after discussing the offer with the PEC Board. Quentin Capital first approached Garza in June in Washington, D.C., where he was providing testimony in support of the Cooperative’s reform efforts.

The PEC Board responded to this and any other potential offers by passing a resolution stating that the Cooperative is not for sale, and also made a motion to create policy and update PEC’s bylaws to establish procedures for reviewing qualified offers. All 14 Directors in attendance stood and were applauded for taking a united stance against the sale of the Cooperative. In a symbolic move, Advisory Directors also showed unified support against a sale through a show of hands.

Before the Board made public their stance against the sale of PEC, several members also spoke out against the sale.

'Sale of PEC would be of no benefit to members'

“The sale of the Cooperative and conversion to an investor-owned utility offers absolutely no benefit to the membership, and in the long run, means that Cooperative members will pay substantially higher prices,” PEC member Jerry Thomas related to the Board. “The interests of this venture capital group and the membership are not aligned in this proposal. The investment group wants to make a profit, paid for by the membership. The membership’s interest is in quality service and reasonable rates, which we already have. I believe that the Cooperative should not be for sale today, tomorrow or ever, at any price.”

PEC member Carlos Higgins agreed, saying, “I couldn’t agree more that it would be foolish to sell it.”

Other members commented on PEC’s Interconnection Policy and thanked the Cooperative for recent changes in policy and governance.

Rebates to businesses for lighting efficiency

The Board also approved a revision to PEC’s Commercial Lighting Rebate Program to encourage participation, lowering the minimum electric demand reduction requirement by more than half, from 50 kilowatts to 20 kilowatts. This conservation-driven program, part of PEC’s Green Works initiative, offers PEC members rebates for installing energy-efficient lighting in their existing commercial buildings and in new commercial construction within PEC’s service area.

In other business, the Board passed a conservation resolution to formally state PEC’s goal of achieving “up to 20 percent reduction in the electricity requirements of residential and commercial users.”

In addition, the Board passed a motion to assign PEC’s right to allow other utilities receiving power from the Lower Colorado River Authority to utilize the 10 percent portion of wholesale power that PEC’s contract with the LCRA allows to come from other generators. PEC’s membership benefits from this measure because it gives PEC the opportunity to purchase 100 percent of its electricity from the LCRA, which is currently less expensive than purchasing power on the open market.

PEC District 5 Advisory Director James Spellman thanked PEC employees for their initiative in requesting that their traditional employee picnic and Christmas party be cancelled this year in response to current economic conditions and members’ increased costs for electricity.

Building on the open meetings and open records policy passed in their August meeting, the Board approved a motion to provide to members and meeting attendees packets of information outlining items the Board considers at its meetings. The Board also revised the practice of reporting invoices received by PEC to the Board to increase the minimum dollar amount to $10,000.

Co-op's assests increase by $75 million

PEC Accounting Coordinator Monica Williams reported that PEC’s assets have increased $75 million in the last seven months to $1.295 billion, and PEC members used approximately 500 million kilowatt-hours in July 2008, a 22 percent increase over 2007. Williams also noted PEC will have to consider in October a half-cent per kwh increase in wholesale power costs from the LCRA, adding that purchased power costs increased 32 percent from July 2007 to July 2008.

Cox provided an update on the progress of PEC’s new open records and open meeting process, stating that other cooperatives and legislators have expressed interest in learning more about the policy. Cox also reported that the Board’s Governance Committee is beginning preparations for the 2009 Board election.

Garza presented for Board approval the confirmation of Luis Garcia as Interim General Counsel, which the Board unanimously approved. Garza also gave a report stating that PEC is not involved in any settlements with appellants as previously reported, and gave information about the Cooperative’s emergency operations related to Hurricane Ike, including the release of 50 contract crews and 15 PEC employees to aid utilities affected by the storm.

The Board’s final action was to approve holding the next Board meeting Oct. 20 at 10 a.m. at the Hays CISD Performing Arts Center, located at 979 Kohler’s Crossing in Kyle. A map to the meeting location will also be made available at www.pec.coop or mailed upon request.