A Midlands power company with some of the highest electricity rates in South Carolina is embroiled in controversy after its part-time board members gave themselves high pay and benefits, then worked to defeat proposals to rein in their compensation.
With 13,600 customers, Tri-County Electric is one of the smallest electric cooperatives in the state. But the co-op’s nine-member board makes far more — about $52,000 a member in 2016, according to tax records — than their counterparts at South Carolina’s 19 other co-ops.
In part, that is because the co-op’s board held 50 meetings last year, a high number by industry standards. The meetings were part of a years-long pattern of leaders of the St. Matthews-based company calling short meetings — as brief as 15 minutes long — and then collecting a $450-a-day allowance that they are paid to attend meetings.
The veteran board members also have given themselves lifetime health insurance through the co-op’s employee-benefit plan.
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At one point last year, Tri-County’s longtime board chairman, Eastover farmer Heath Hill, requested the co-op look into whether it also could start a pension plan for its board members, according to the co-op’s chief executive.
The part-time gig as co-op board chairman paid Hill nearly $79,000 in 2016. By comparison, the multibillion-dollar, state-owned Santee Cooper utility — which supplies most of Tri-County’s electricity — pays its board members $10,000 a year.
Months ago, a national co-op association and a Charlotte attorney convinced the board that its pay policies were out of whack. But after adopting rules to limit their pay, some board members lobbied against the proposed changes to make sure they weren’t approved by customers at Tri-County’s annual meeting last week, critics say.
The new pay rules were rejected by a razor-thin margin — 30 votes out of 2,120 — after some board members’ family members and friends handed out “VOTE NO” flyers outside the annual meeting, according to three Tri-County employees.
Afterward, two board members who had pushed for the changes resigned on the spot.
“I saw that there was no way we were going to change the mentality of that board by being on it,” said Barry Hutto, a 10-year Tri-County board member who quit Thursday, along with 20-year board member Jeff Reeves. Both said they are proud of the co-op’s employees but couldn’t go along with the board.
Hill declined to comment for this story, referring questions to Tri-County Chief Executive Chad Lowder.
The annual meeting has left some customers furious.
Lowder said he is fielding calls regularly from customers asking about the annual meeting.
State Rep. Russell Ott, D-Calhoun, said he also has heard from “a ton of people.”
“I’ve got grave concerns about what I’m hearing,” Ott said. “I’ve got grave concerns from employees of Tri-County that are extremely upset. This is just another example of utilities that I think we have ignored for far too long.”
Douglas Reeves, chairman of the Electric Cooperatives of South Carolina, which represents all 20 co-ops, said he was “disheartened to read about the issues that have been raised at Tri-County Electric Cooperative.”
“In addition to anything Tri-County’s board or membership may choose to do, I plan to appoint a task force of locally elected board members to examine issues of transparency and accountability and offer recommendations for improvements at local cooperatives.”
Out of public view
While a political firestorm has been raging for months over the $9 billion failure of state-owned Santee Cooper and investor-owned SCE&G to build two new reactors at the V.C. Summer Nuclear Stateion in Fairfield County, smaller power companies, including Tri-County, mostly have avoided public scrutiny.
Tri-County, like the state’s other co-ops, is a nonprofit that buys most of its power from Santee Cooper. It then sells that power to customers in parts of Calhoun, Orangeburg, Richland, Lexington, Kershaw and Sumter counties.
The co-ops are autonomous, unchecked by legislative oversight committees or the state agencies that police investor-owned utilities, including SCE&G and Duke Energy. Tri-County’s board members are elected by the co-op’s customers. But the board does not publish its meeting minutes online.
With almost no one watching, Tri-County’s board pay steadily has climbed over the past few years. Seven of its nine members — with Hutto and Reeves the exceptions — made at least $45,000 in 2016.
In contrast, board members in South Carolina’s other co-ops earn about $28,000 a year, on average. Nationally, that number is close to $15,000 a member, according to a national trade group.
No other S.C. co-op paid its board members more than $43,700 in 2016.
Meanwhile, Tri-County’s residential customers pay some of the highest power rates in the state: about 15.2 cents per kilowatt hour, higher than even SCE&G’s much-maligned rates. In part, Tri-County’s high rates are because the co-op’s service area is so large and it has so few customers.
“Anywhere we can find savings is going to reduce our costs,” said Lowder, Tri-County’s CEO. “Everything goes to the bottom line.”
‘They’re trying to make a living on the co-op’
Tri-County’s high board pay stems from its frequent board meetings and the health insurance that the co-op buys for its trustees.
In addition to the 12 monthly meetings held each year, Tri-County’s board members met — collectively and in smaller groups — 38 more times in 2017.
Many of those extra meetings lasted just 15 to 30 minutes, and could have been scheduled for the same day as the monthly meetings to save costs, Lowder said. But having more meetings meant some of Tri-County’s board members could get special payments they are paid for going to meetings — $450 in per diem.
“In my experience throughout the co-op world, I’ve not known any boards to meet in that level of excess,” Tri-County CEO Lowder told The State. “I’ve not heard of any neighboring co-ops that do that. Personally, no, I do not feel like that’s normal.”
By contrast, Mid-Carolina Electric, which borders Tri-County to the west, typically holds no more than 14 meetings a year, according to its chief executive, Bob Paulling, who was Tri-County’s CEO until 2013.
Carl Weeks, who was on the Tri-County board a decade ago, said the trustees did not meet as often when he was on the board.
“They’re trying to make a living on the co-op,” Weeks said, pointing to the difference between Hill’s $79,000 annual pay in 2016 and the $24,000 that Reeves earned on the same board. “It’s about as clean as you can put it out there. The bylaw changes would have been great.”
Hutto and Reeves, the board members who quit last week, said their eyes were opened to the problems last October when a consultant from the National Rural Electric Cooperative Association explained Tri-County’s board pay was the highest of any co-op in the Southeast.
An attorney was brought in from Charlotte to draft a new set of bylaws that would cap board pay at the statewide average, require board members to pay for their own health insurance and make it easier for co-op customers to run for the co-op’s board.
The board provisionally adopted those policies — described as the “gold standard” for co-ops — at a meeting in January. “I was very proud of what we did,” Reeves said.
Reeves, Hutto and Lowder say they aren’t sure what changed over the next few months. But at a meeting in April, board Treasurer Kenneth Davis Jr. unsuccessfully tried to cancel the proposed board changes before they were sent out to the co-op’s voters.
Reeves and Hutto said they were shocked to see opponents trying to defeat the bylaw changes at last Thursday’s annual meeting.
Three Tri-County employees, who asked that their names not be used for fear of retaliation, said they saw relatives of Hill and board member Barbara Heape passing out flyers and urging co-op voters to reject the new bylaws.
Heape refused to answer questions about her relative’s involvement, referring them to Hill.
Lowder said the bylaw change fell victim to a misinformation campaign outside the annual meeting.
“It was false information that was being spread,” Lowder said. “It was telling members that the bylaws would eliminate the board ... that all the authority would go to the CEO. The whole argument against it was false.”
With the bylaws rejected, the board can revert to its old pay structure at will, Lowder said.
“It has been disheartening,” Hutto and Reeves wrote in a May 19 letter to Tri-County’s employees, “to witness the board transform from a unified group of nine into a segregated group with a majority whose reasonable judgment is seemingly clouded by self-interests.”