Pedernales Electric Cooperative has retained Jimmy Williamson, principal of Houston law firm Williamson & Rusnak, to spearhead an investigation of the Cooperative’s former legal partner, Clark, Thomas & Winters. Williamson will probe Clark, Thomas & Winters on issues revealed by the Navigant Consulting investigation report made public in December 2008.

The investigation will focus, among other things, on questionable payments made by Clark, Thomas & Winters while the firm served as counsel for PEC. Williamson’s firm also will develop and recommend possible actions the Cooperative can take to protect its members’ interests.
“We conducted a thorough search to find the right representative to lead this investigation,” said PEC Interim General Counsel Luis A. Garcia. “Williamson’s experience in complex commercial litigation convinced us he was the best choice for the job. We look forward to working with him to secure PEC a favorable resolution of this matter.”
Williamson’s firm has more than 30 years of experience in the area of legal negligence and malpractice. The firm practices throughout Texas and also has handled cases in New York, Florida, Louisiana and California. Williamson has been a member of the State Bar of Texas since 1978 and has been named a Texas Super Lawyer for the last five years.
“In taking this action, PEC is upholding its fiduciary responsibility to the membership,” said PEC General Manager Juan Garza. “I am satisfied this is a strong choice for the Cooperative at this time, and we welcome the experience and expertise Mr. Williamson will bring to the table.”
In the Texas Legislature, Sen. Troy Fraser, R-Horseshoe Bay, and Representative Patrick Rose, D-Dripping Springs, filed legislation last week in an effor to ensure that electric cooperatives are open and responsive to their members. The legislation addresses the rights of members to access board meetings and cooperative records. It further requires electric cooperatives to hold fair and open elections so that all members have a voice.
“We are strong supporters of electric cooperatives,” said Fraser and Rose in a joint statement. “The beauty of the electric cooperative system is that members are able to determine how best to run the system through the election of a board of directors. The 3 million Texans served by co-ops need the protections provided in our legislation to have earnest and lasting local control.”
Senate Bill 921 and House Bill 1390 would further amend the Utilities Code to:
• Prohibit proxy voting by board committees at PEC;
• Set forth guidelines for the use of proxies in board elections at all other co-ops;
• Prohibit the use of prizes as incentives for providing of proxies in board elections;
• Require that PEC elect board directors by district and prohibits at-large directors;
• Set forth provisions for Open Meeting requirements at all co-ops;
• Allow for executive sessions of co-op board of directors but make all final actions, decisions and votes public. Also require that written/audio records of executive sessions be maintained for two years;
• Set forth provisions for Open Records requirements at all co-ops;
• Require co-op boards of directors to adopt written policies for: travel expenditures, reimbursement, conflicts of interest, whistleblower protections, procedures for 3rd party professional services, and a committee to audit actions of the co-op board;
• Require annual, independent financial audits of all co-ops;
• Authorize state audits by the State Auditor, if approved by the Legislative Audit Committee;
• Set forth complaints process for co-op members including an initial review by a co-op’s General Manager and a right of appeal to the Public Utility Commission (PUC);
• Prohibit PEC from generating electricity without prior approval by the PUC, and
• Require all Texas co-ops to notify PUC when creating a business entity not related to its core purpose of generating, transmitting or distributing electric energy.
During the legislative interim, light was shed on problems concerning management practices at the Pedernales Electric Cooperative (PEC). Those practices included the lack of transparency by the board of directors and senior management in both meetings and records and the lack of fair elections.
While the law governing electric cooperatives establishes a rough framework for organization and operation of the entities, the bylaws adopted by the board have the biggest impact on how an electric cooperative functions and how board members get elected.
This was evident in the case of PEC. The board had the ability to utilize a cooperative member’s vote via proxy for a “board approved” slate of candidates, thus undermining the cooperative members’ potential to affect any change at the board level.
“If members do not like the policies set by the board of directors, they can and should vote them out of office,” said Fraser.
In theory, a democratically elected board should act and vote in a manner that best suits not just the cooperative, but also the membership of the cooperative. While the current statutory framework harbors good intentions, its delegation of much of the authority to the board through the establishment of the cooperative bylaws provides an avenue for manipulation and malfeasance.