Patrick Rose

Like Rep. Patrick Rose, D-Dripping Springs, we would prefer to see the state auditor do a thorough financial and governance audit of Pedernales Electric Cooperative Inc. rather than the consultant agreed to by Pedernales’ own board. But that, apparently, is not to be, because the state auditor, John Keel, says his office is fully occupied with state business.

Instead, under an arrangement agreed to by Sen. Troy Fraser, R-Horseshoe Bay, Navigant Consulting Inc. of Chicago will do the audit as planned but with the state auditor able to review and comment on its findings. State officials also could expand the scope of the audit. As part of a settlement in the lawsuit brought against the Pedernales board by some co-op members, a state district judge already has approved the selection of Navigant to audit the co-op’s records for the last 10 years.

The lawsuit helped uncover such lavish and questionable spending by the board and top management that the longtime president and general manager were forced out and there’s a criminal investigation underway. Based in Johnson City and serving much of the Hill Country, the co-op has about 220,000 members.
Navigant is a reputable firm. The Pedernales board is not, and that’s the problem. As Rep. Mark Strama, D-Austin, told Pedernales officials during a Senate hearing last week, “It’s hard not to feel like you want to control the auditor so that you can control what they find.”

Juan Garza, the new general manager at Pedernales, said Navigant would report directly to him, not to the board. Garza, who has promised a regime of openness, also said the audit will be public. Any parts of the audit completed before the next board election, on June 21, will be released immediately to co-op members, he said.

Libby Linebarger, a former state representative and a nonvoting director of the Pedernales board, said at the same hearing, “The reason we gave control – complete control – of the Navigant audit to Mr. Garza was because we wanted to distance ourselves from it. We are determined that if there’s anything that needs to come out, we’re the first that want it to come out. We want to know ourselves.”

Under pressure at the hearing Thursday, the board members present, including board president E.B. Price, agreed to submit to a state audit. (Although it’s a nonprofit corporation with a state-guaranteed monopoly, the co-op is not subject to state regulation or oversight – as it should be.) But Fraser, who has helped lead the effort to reform the co-op, later agreed to settle for having the state auditor oversee Navigant’s work rather than do the audit itself.

It’s up to Navigant, now, to demonstrate its independence and integrity by conducting an audit that leaves no room for doubt that it pulled open every drawer and poked into every corner of the co-op. And the board’s directors must keep their hands off the audit and live with the findings, however painful, if they expect anyone to trust the results.

The Editorial Board, Austin American Statesman