The Pedernales Electric Cooperative Board of Directors met Monday afternoon at the PEC headquarters’ auditorium in Johnson City. New General Manager, Juan Garza, sat at the head table next to President E. B. Price, and offered input and explanations on several agenda items.
Kimberley Paffe, General Counsel and Legal Services Manager with PEC, said that answers to questions about the petition process to run for board seats would be posted on the PEC website on Tuesday. There was no board discussion about what the questions were or what the PEC’s answers would be to those questions. No further information was provided about the petition process other than advising candidates to get petitions in early so that the signatures can be verified before the filing deadline of April 7 at 5 p.m.
The PEC said it has received only one completed petition so far, from Paul Langston of Horseshoe Bay, who is running for the District 5 Advisory Director seat. Three other seats are up for election this year.
In January, Advisory Director Libby Linebarger, speaking for the PEC, said that the board would interview candidates and appoint a person to fill the board vacancy left by the resignation of Bud Burnett. However, at Monday’s meeting, the board decided to put the unexpired one year term of the vacant District 7 Director seat on the ballot with the four places up for election this year.
Director Barry Adair said the board should “allow the election process to take care of the vacancy.” He said that the membership “wants to speak” on who replaces Burnett and that an election is “the most open process.”
The board voted to “suspend the bylaws” relating to filling a vacancy this one time, and put it to a vote of the membership.
Garza said he has met with several Lower Colorado River Authority representatives, including new CEO and General Manager Tom Mason, about the future relationship between PEC and the LCRA. Adair asked Garza if the LCRA indicated it would “allow PEC some ownership interest in the future.”
Garza said, “Now we’re a wire business. Once you start owning generation facilities, it is a completely new business.” Garza suggested that the board hire experts and task its own staff to develop a study of the issues before making major steps in that direction.
PEC Financial Manager Mike Vollmer presented a request for the “routine monthly transfer” of $400,000 from PEC to Envision Software. This “routine monthly transfer” did not appear on the January agenda. Vollmer explained that the majority of this money goes to pay labor costs. Board Secretary-Treasurer O.C. Harmon abstained from voting on the transfer of funds because he is on the Envision board of directors. The measure passed without objection.
PEC member Dave Collins told the board, “If this is a structured agreement with a recurring need to infuse money into the company,” then PEC should divest itself of Envision.
Vollmer recommended that the board again hire KPMG to perform its annual audit, saying it would be a “financial audit only.” He said other audits would occur later in the year, such as ones involving IRS and 401(k) filings.
Garza said it is wise to change accounting firms every 4 or 5 years, but because PEC is “pretty well into the year” they would stay with KPMG this year. Director E. B. Felps said there are only a limited number of firms who are qualified to perform the consolidated audit.
The board action to engage KPMG came a month after the board tabled the item at the January meeting, and three weeks after the PEC advised the public in a press release that they would hire a “national, independent auditing firm to perform a thorough audit of their operational and financial practices…in addition to PEC’s annual financial audit to be conducted by the national accounting firm KPMG LLP.”
The board unanimously approved the other four contracts it had tabled at the January meeting.
Last month, the board took member comments before conducting any business. This month, the board took member comments after they concluded all the agenda business.
Debbie Velchoff drove an hour and a half from Leander to attend the meeting to deliver her message to the board in person. She urged the board to agree to have the State Auditor’s Office conduct a complete review of PEC business and financial practices. Velchoff said that the PEC’s recent efforts to open the process to members “were the result of the lawsuit, state senators and representatives and member” pressure. “The members don’t trust you. I don’t trust you. We would trust an SAO audit.” She asked the board to resign.
Ric Sternberg with the PEC4U.org group asked the board to include meaningful information from all candidates in a form available to members, both on the PEC website and via mail with the annual ballots. Sternberg said that PEC4U has posted 23 questions for candidates on its website and asked PEC to disseminate candidates’ answers to these questions.
In response to Sternberg’s thanking the board for opening up their meeting to the public, Advisory Director Rusty Allen said that board meetings have always been open to the public since he’s been on the board. Sternberg replied that, until recent changes, he and others were not able to enter a meeting without permission of former General Manager Bennie Fuelberg, and when they were allowed into a meeting, once they had addressed the board, they were escorted out of the meeting room.
As Allen and Sternberg were disputing their versions of open meetings in the past, PEC attorney Will Moursund broke off the discussion saying, “This is not a period of Q and A.”
Moursund, however, did not cut off member Preston Kirk of Barton Creek Lakeside, who asked several questions and received feedback from the board about oak wilt, employee alcohol testing policies, and the possibility of asking the Forest Service to monitor the landscape, before and after PEC construction activities.
The board adjourned to enter a closed executive session, which they said would be quite lengthy.