Politics & Government

Customer sues Midlands utility that paid its board 'enormous and undeserved profits'

Barry Hutto, left, and Jeff Reeves, right, resigned from the Tri-County Electric Cooperative board last Thursday at the co-op's annual meeting. Hutto and Reeves said they were frustrated that some members of the board had fought a plan to rein in board pay.
Barry Hutto, left, and Jeff Reeves, right, resigned from the Tri-County Electric Cooperative board last Thursday at the co-op's annual meeting. Hutto and Reeves said they were frustrated that some members of the board had fought a plan to rein in board pay. awilks@thestate.com

A Tri-County Electric customer has filed a federal lawsuit against the Midlands electric cooperative, seeking to claw back the "excessive" compensation the utility's part-time board paid itself while customers faced high power bills.

The lawsuit was filed by 66-year-old Hopkins resident Roy Smith a day after The State reported Tri-County's board had rewarded itself with the highest pay of any of South Carolina's 20 co-ops, and then worked to defeat a proposal to limit board member's pay and health care packages.

Meanwhile, by Wednesday, Tri-County's staff had fielded more than 300 calls from customers complaining about the board's pay, according to the co-op's chief executive, Chad Lowder. Some of those customers asked about the possibility of gathering enough petition signatures to kick the board members out of office, which is allowed under the co-op's rules.

At the same time, one S.C. lawmaker from the area said he was drafting proposals to require the board to be more transparent in its actions. Another said she had invited Tri-County board members to explain themselves at a June 19 community meeting.

Smith's lawsuit, filed late Tuesday, "seeks to restrain Tri-County Electric from paying a small group of self-serving officials enormous and undeserved profits."

Smith's attorney is Graham Newman of Columbia, who specializes in class-action lawsuits. With a federal judge's permission, all of Tri-County's 13,600 customers in Calhoun, Orangeburg, Richland, Lexington, Kershaw and Sumter counties would be added as plaintiffs.

Smith's suit alleges Tri-County's part-time board has paid itself some $6 million since 2004 in per-diem pay, health insurance and other benefits.

The co-op's nine-member board were paid about $52,000 each in 2016, according to tax records. That's far above the statewide average of $28,000 for an electric co-op board member and the national average of $15,000.

Tri-County's board pay was inflated in part because it offered life-long health insurance to its longtime board members and because of the board's high number of meetings.

The Tri-County board held 50 meetings last year — 12 monthly meetings required by law and an additional 38 meetings. The extra meetings often were short — some as brief as 15 minutes long — but, nonetheless, allowed board members to collect a $450-a-day allowance for attending a meeting, Lowder said.

Smith's suit asks a judge to stop the board's current pay practices. Newman said the judge also could decide how much of that pay was reasonable, then order the rest be repaid to Tri-County's customers. The case has been assigned to U.S. District Judge Michelle Childs of Columbia.

State law prohibits co-ops, which are nonprofits, from paying their board members excessively, and it requires co-ops to pass along any profits that they make to their customers, the suit notes.

"They treated the cooperative more like a slush fund than actually serving the interests of their members," Newman told The State.

Lowder, Tri-County's CEO, said he had heard comments from customers about filing a class-action suit. "I'm not surprised by it."

State Rep. Russell Ott, D-Calhoun, said he was working to file proposals to require the board to be more transparent in its actions, adding he hopes the Legislature will consider the bills when it returns to Columbia next month.

Ott suggested the Legislature should require co-op board members to disclose their pay publicly, publish the minutes — or written records — of board meetings on the co-op's website and limit their closed-door meetings.

"I didn't get off the phone yesterday," Ott said. "People are angry. They are truly angry. They feel taken advantage of, not by a big company like SCE&G, but by someone they know."

State Rep. Wendy Brawley, D-Richland, said she has scheduled a June 19 community meeting at Eastover Park so Lower Richland residents can hear from Tri-County board members and staff.

"I've heard a lot from my constituents," Brawley said. "They are not pleased. I've not heard from one constituent that had a supportive voice about what went on at that meeting" last week.

Some co-op customers also are considering petitioning for another annual meeting so they can oust the Tri-County board.

According to the co-op's bylaws, another annual meeting will be held if 10 percent of the co-op's customers — or 1,360 people — sign a petition. If 300 of those customers also call for the immediate removal of board members, the ensuing meeting would include an ouster vote.

The co-op's board provisionally adopted new policies in January capping their pay at the statewide average and requiring board members to pay for their own health-insurance after an intervention by a national trade group and a Charlotte attorney.

But some board members worked to defeat those proposed bylaw changes, voted down by a razor-thin margin at the co-op's annual meeting last week.

Two board members who had pushed for the changes — Barry Hutto and Jeff Reeves — resigned on the spot in protest.

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.

Reach Wilks at 803-771-8362. Follow him on Twitter @AveryGWilks.
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