The recent bylaw changes affecting director qualifications mean that DEC's directors no longer have to be members of the cooperative. They also no longer have to be residents of the cooperative's service area. Does that sound consistent with cooperative principles to you?
The section on General Director Qualifications within Dunn Energy Cooperative's previous bylaws reads as follows:
To become or remain a Director, a person must …
1. Be a Class A member;
2. Be an individual;
3. Have the capacity to enter legally binding contracts; …
(Items 4 and 5 unchanged)
6. For at least 240 days during the prior one (1) year period, use the Cooperative’s electric service at, and occupy as a residence, a location within the Cooperative’s service area.
After the recent changes, the new language reads like this (changes italicized):
To become or remain a Director, a person must ...
1. Be an individual;
2. Be a Class A member, or an individual authorized by an entity Class A member;
3. Have the capacity to enter legally binding contracts; ...
(Items 4 and 5 unchanged)
6. For at least 240 days during the prior one (1) year period, use the Cooperative’s electric service at a location within the Cooperative’s service area.
These drastically loosened requirements (no need to be an actual member; no need to be a resident) allow companies to appoint non-member, absentee directors (such as consultants, lobbyists, employees, or executives) from outside the area, state, or even the country. That means those individuals could be making decisions that would affect residents of this area without being residents themselves.
Theoretically, that means somebody working on Wall Street or living in Tokyo could be making decisions that affect your electric service, your local community, and your quality of life. That could result in large, distant businesses having far too much influence over our cooperative's board and its decisions.
There were some very good reasons that our previous bylaws expressly prohibited non-resident, non-member board directors:
As co-op members, we want our area directors to be aware of local concerns and needs, and to be directly accessible and accountable to their neighbors and fellow member owners.
We want to be sure our directors are representative of and connected to the communities they are supposed to be serving, not just looking out for their own business or political interests.
The investments that built this country's rural electric co-op came from individual residents and small businesses who couldn’t get electric service from large, non-resident, profit-driven corporations. Why? Because there wasn't enough money in it. Today, electric cooperatives control more than 70 percent of this country's power lines. There’s no reason we should now hand over control of our co-op's resources to those same sorts of large, non-resident companies. But sweeping changes to Wisconsin state laws (check out Wisconsin Act 76) are making that a real possibility.
Furthermore, there is currently no limit to the number of non-resident directors allowed. Even a minority number could influence the majority of the board, resulting in subsequent bylaw and policy changes that could further undermine and corporatize our cooperative. This has been a major concern among many cooperatives since Wisconsin's so call "co-op modernization" act passed in November of 2017.
Right after that bill passed, both the Wisconsin Farmers Union and The Country Today published articles expressing concern about the law's negative implications, and warning cooperatives like ours to be on the lookout for subsequent problematic bylaws changes — changes that could undermine local controls and cooperative principles.
DEC's management and board have tried to reassure concerned members that this sort of corporatization "would never happen" at our co-op. They insist that the recent bylaw changes pose no threat. At the annual meeting, general manager James Hathaway and board president Larry Amble suggested that the changes were merely intended to serve local farm owners whose businesses are held as LLCs or S corporations, or whose owners just happen to live a bit outside DEC's service area.
Right now, the bylaws in no way provide support for the reassurances they is claiming. And the bylaws, as drafted, were clearly not crafted to address local concerns.
The co-op’s bylaws have always allowed local business owners, including those with LLCs and S Corps, to serve on the board. If the primary goal of the amendment was to allow those just outside the service area to serve, we think the language could have been far more specific, indicating that board candidates can live in a township, village, or city within or adjacent to the service area, for example. Instead they have been opened up to allow for virtually anyone to serve.
Hathaway also emphasized that no matter what the director qualifications say, members can easily weed out any candidates they don't like or trust, so there's no reason to worry. But how many times have you been told that something "will never happen" that then does happen? And how much information do you really have about the board director candidates you are voting for? A brief bio at most. With limited local competition for board seats, and only a tiny percentage of members voting in elections, any well-financed outsider candidate with a decent campaign effort could easily kill the chances of most average-resident nominees.
With no opportunity to publicly meet and ask questions of director candidates before voting, and with only a few summary lines of information provided in the director-candidate profiles (which tend to focus more on their family and church ties), it's almost impossible to tell one candidate from another, to evaluate their potential agendas, or to assess their likely positions on important issues.
A large out-of-state corporation with a significant energy project at stake would have plenty of good reason (and financial ability) to influence a rural electric cooperative like ours. They could easily nominate a full-time employee or consultant to sit on our co-op's board of directors for the express purpose of steering the decisions in which they have a direct interest.
Bottom line: If you value cooperative principles and you care about local controls, the changes to our cooperative's bylaws governing director qualifications are not something you'd want to support.