Patrick Rose

State senator, representative plan to again push legislation calling for specific co-op reforms.

By Laylan Copelin
AMERICAN-STATESMAN STAFF

The firing of Pedernales Electric Cooperative General Manager Juan Garza last month has put the troubled co-op back in the cross hairs of the Texas Legislature.

"We created Pedernales," said Sen. Troy Fraser, R-Horseshoe Bay. "We can uncreate it."

No one is seriously talking of dismantling the nation’s largest electric cooperative, but key lawmakers are promising to resurrect legislation that would hold Pedernales to stricter standards than other co-ops. The bill died in a legislative traffic jam in the final hours of last year’s session.

In a fence-mending move, Larry Landaker, chairman of the Pedernales board and a key architect of Juan Garza’s firing, said this week that he has invited Fraser and Rep. Patrick Rose, D-Dripping Springs, to the board’s August meeting.

"There was some anxiety over the Garza matter," Landaker said of his letter to lawmakers. "We wanted to give them the opportunity to say whatever they want to say."

Last year, Fraser and Rose championed a bill to make the operations of all cooperatives more transparent. The legislators included stricter requirements for Pedernales, which has more than 200,000 members and has been rocked by scandal and charges of wrongdoing.

Bennie Fuelberg, who was the co-op’s general manager for more than 30 years, is awaiting trial on charges of felony theft.

Fuelberg and the co-op’s former general counsel, Walter Demond, are accused of arranging for thousands of dollars of co-op money to be paid to the relatives of Pedernales executives. Both men have denied any wrongdoing.

Fraser and Rose give the new Pedernales regime, including Garza and newly elected board members, credit for changing the secretive culture fostered by Fuelberg and his handpicked directors. Garza replaced Fuelberg in February 2008, promising a new era of openness.

But two incidents this year caught lawmakers’ attention. The first was when the seven voting members of the board couldn’t muster the two-thirds majority to pass bylaws solidifying reforms, including term limits for board members. The second was Garza’s firing on June 14, just days before the last remaining Fuelberg-era directors were replaced in board elections.

In both instances, the holdover directors — O.C. Harmon and R.B. Felps — cast key votes.

Before Garza was fired, Fraser said he urged the board either to keep Garza because he was a "productive" successor to Fuelberg or to wait for the two newly elected directors to come on board before considering his removal. He said Harmon and Felps were being "vindictive" in firing Garza as their terms ended and that the action was a waste of co-op members’ money because Garza was paid $1 million in severance.

This week, Landaker said he had no second thoughts about the firing or its timing. He and Cristi Clement, both elected as reformers in the wake of Fuelberg’s departure, voted to remove Garza.

"If the board judgment is that a change in management is necessary to move forward in a productive way, a board needs to act," Landaker said. "The new board members would not have been equipped to make that call initially."

Landaker has said Garza wasn’t moving fast enough on changes for some board members.

Fraser cited three key elements in the legislation that will be refiled: mandating the election of board members from single-member districts instead of being chosen districtwide; cutting the compensation of board members; and prohibiting the co-op from owning power generation facilities.

Fraser said it is costly for a director to seek votes from more than 200,000 co-op members scattered from Austin’s suburbs through the Hill Country. He said cutting compensation of board members and prohibiting expensive investments in generation — at one time a goal of Fuelberg’s — would save money for co-op members.

Landaker said he hoped the board will "speak with one voice" on any proposed legislation. But he said he held his campaign costs to $200, primarily by using the Internet. He said the co-op, a retail provider of electricity, is not considering investing in power generation plants.

Finally, he said, the board already has cut directors’ pay by about half. (A director is now paid $1,500 a month plus $750 a meeting and $500 for a subcommittee meeting, which has averaged between $30,000 and $35,000 per year.)

"We are obviously aware that the Legislature has interest in some reform," Landaker said. "I would remind anyone that PEC continues to move forward with its own reforms."

Patrick Cox, a board member who endorsed the Fraser-Rose legislation last year, said he intends to bring the bylaws up for another vote. But he said he understands why the Legislature has singled out Pedernales for extra attention.

"Given the history of the organization," Cox said, "it was a necessity to have that legislation."

Rose said the board’s recent actions underscore that continued need.

"You can’t depend upon a particular board to necessarily protect the interests of co-op members," he said. "It shouldn’t be left to the fickleness of any particular board."

lcopelin@statesman.com; 445-3617