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PEC donates over $1 million in one year
Bulk of funds help members keep the lights on
Wednesday, March 4, 2009 • Posted March 3, 2009

A snapshot of charitable contributions and community assistance funded by rate payers of the Pedernales Electric Cooperative shows the utility contributes over $1 million each year to a wide variety of recipients, including high school students, public schools, public service organizations, volunteer service groups and financially strapped customers. In addition, PEC contributes an un-quantified amount of “in kind” service throughout its service area.

The money for these donations comes from revenues received from the sale of electricity to the cooperative’s members spread over the 23 counties it serves in the Texas Hill Country. From Nov. 1, 2007 through Nov. 30, 2008, the co-op donated $1,087,056, more than half of which ($603,154) was distributed through the PEC Community Assistance Program to PEC members needing help paying their electric bills. For 2009, the PEC Board of Directors has budgeted $500,000 for this program.

Paul Hilgers, PEC Deputy General Manager, announced in January that the Community Assistance Program was being reviewed and redesigned. The program has been administered entirely by local community action agencies that are allocated a dollar amount based on the number of meters in the each county the agencies serve. The agency completes a form showing the amount to credit a member’s account. PEC applies a credit in that amount to the member’s account and deducts the figure from the county’s allocation. No money changes hands.

Hilgers said PEC is considering making changes in the Community Assistance Program to work more closely with local agencies, establish uniform but flexible criteria for providing PEC assistance, consider limiting assistance to once a year, review the method of allocation of the funds, and use the program as a vehicle to educate low income households about energy conservation.

Paul Langston of Horseshoe Bay suggests that PEC could better serve its lower income members on a regular basis by abolishing the $20 monthly meter fee for residential customers who use less than 800 kwh per month. Currently, a customer who uses 800 kwh of electricity a month is charged $105 ($85 for the cost of electricity plus the $20 meter fee). Langston says such a plan would also encourage and reward energy conservation.

The second largest donation by PEC goes to PEC United Charities, Inc., a 501(c)(3) non-profit corporation. Through payroll deductions, PEC employees who choose to participate donate an amount equal to 70% of one hour’s pay each month to United Charities, and the co-op matches these payroll deduction contributions. Its IRS Form 990 shows that United Charities donated $386,945 to 338 different charities and community endeavors during 2007. The Make A Wish Foundation of Central Texas received the largest donation, $14,105; St. Jude Children’s Research Hospital received $9,299; the American Diabetes Association received $9,134. Three Boy Scout Troops and eleven other entities received the smallest donation of $50 each in 2007. United Charities made contributions to 52 churches during the year.

PEC’s civic contribution policy, which was started in 1991, is reflected in its Light the Way Program which gave 153 groups $1,000 each during the twelve month period Nov. 1, 2007 through Nov. 30, 2008. In January 2009, the PEC Board of Directors expanded the Light the Way Program to include 171 groups, each of which received a $1,000 donation. Light the Way recipients include chambers of commerce, economic development organizations, EMS groups, libraries, fire departments, child advocacy agencies, and senior citizen groups.

The PEC supports four education programs. The largest, the Scholarship Fund, has given $1,000 awards to 50 graduating high school seniors every year since 2005. While PEC revenues fund the bulk of this annual award ($42,000 in 2008), additional contributions are generated via employee donations to United Charities ($2,520 in 2008), escheated funds ($6,235 in 2008), private donations ($650 in 2008) and other sources. In 2008, 349 high school seniors applied for the fifty $1,000 scholarships.

Approximately $27,500 is spent on the annual Youth Tour Contest by PEC. Winners of the contest join students from across the country on an all expense paid trip to Washington, D.C. Project Graduation donates $500 to each of 35 high school senior classes to help fund an alcohol and drug free party for graduating seniors. PEC donates approximately $14,000 to educational foundations and school districts in its service area.

From Nov. 1, 2007 through Nov. 30, 2008, PEC donated $29,600 to area 4-H and Future Farmers of America chapters and their associated booster clubs to help fund events at local livestock shows.

PEC provides Habitat for Humanity with free electric service to all houses in its service area during construction, waives all establishment fees, and presents the new home owner with a $150 “give-a-watt” check.

In addition to the nine annual charitable and community assistance programs funded from PEC revenues, the board approves one-time contributions on a case by case basis. For the twelve month period studied, the PEC awarded $25,000 to the LBJ Foundation for an exhibit, $5,000 to the Ladybird Johnson Wildflower Center, and $3,500 to the National Arbor Day Foundation.

Not all requests for contributions can be honored by the PEC. For instance, last year the board declined to contribute to a building fund for the Canyon Lake Library, but it offered the group “in kind” help through PEC’s grant writing assistance. During 2008, 17 organizations were awarded a total of $465,929 in grants developed with PEC staff assistance.

Because PEC has trucks on the road daily over the 8,100 square miles of its service area, PEC employees are able to offer unique help to the Rural Crime Watch and the Texas Amber Alert Network. In March 2008, a PEC equipment operator helped authorities identify suspects who were later charged with robbing an elderly man in Buda. The PEC employee had seen three young men approaching the home and notified authorities.

The PEC does not normally prepare a report encompassing its many charitable and community giving programs, and does not keep a break down of the value of “in kind” employee time or co-op materials that are dedicated to these activities.

According to its un-audited Annual Report, 2007 was the first full year for PEC to operate as a “billion dollar corporation.” With total assets listed at $1,129,740,579, net operating income of $16,456,115 and cash at the end of 2007 of $4,326,942, what level of giving is appropriate for an electric utility cooperative? The cooperative’s total cash and cash equivalents has decreased for the past three years, from $5,455,804 at the end of 2006 to $3,978,501 at the end of 2008.

Milton Hawkins, a PEC member from Johnson City, questions whether a utility that is a monopoly should be giving away over a million dollars a year in rate payers’ money, especially when the amount equals 25% of its year end cash balance. The PEC lowered electricity rates in January 2008, and then raised rates in April and July 2008 in response to anticipated increases in rates from its power supplier, the Lower Colorado River Authority. Price increases were attributed to the spiraling increase in the price of natural gas in the first half of 2008.

The charitable and community assistance programs developed under the leadership of former General Manager Bennie Fuelberg and former Board President Bud Burnett have been continued by the PEC board in 2008. Because of the substantial reforms made in the past 18 months to overturn prior management and governance practices established at PEC by Fuelberg and Burnett, members are learning more than ever about the cooperative’s business, including its history of generosity to the communities it serves. Whether PEC will continue, increase or decrease funding donations through electricity rates will be in the hands of its members and the directors they elect.

PEC General Manager Juan Garza respects the cooperative’s history of giving back to its service area. “At PEC we support our members and communities in myriad ways. We are proud of our member assistance program, HVAC rebates and other initiatives. We also feel communities very much appreciate PEC’s support of their youth through scholarships, our grant programs and financial assistance to non-profit groups providing vital services.” However Garza added, “As we evolve, we will continue to review our programs to ensure we are a good steward of member funds while also being a good corporate citizen in the communities we serve.”

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