THE VIRGINIAN-PILOT  
              Copyright (c) 1995, Landmark Communications, Inc.

DATE: Wednesday, January 18, 1995            TAG: 9501180445
SECTION: LOCAL                    PAGE: B1   EDITION: NORTH CAROLINA 
SOURCE: BY THOMAS YOCUM, CORRESPONDENT 
DATELINE: BUXTON                             LENGTH: Short :   50 lines

ACCOUNTING FIRM DEFENDS BILLINGS OF ELECTRIC CO-OP AN AUDITOR CLAIMED OVERCHARGES WERE BEYOND $100,000.

The accounting firm fired by the Cape Hatteras Electric Membership Cooperative for allegedly overcharging the utility contended Tuesday that all its billings were legitimate.

``At no time was Cape Hatteras EMC overbilled in any way for any services performed,'' Johnson and Dooley of Danville, Va., said in a statement. ``All services were requested either by the board, legal council or by management. Services were fully explained on an ongoing basis to either the board or management.''

The statement was released after a preliminary report by an outside auditor investigating the charges told the Cape Hatteras power company Monday night that the accounting firm had overcharged it by more than $100,000 since November of 1993. The board of directors unanimously voted to fire the accountants, who had kept the utility's books for more than 15 years.

``While we have no ill feelings,'' the accounting firm said, ``we are shocked to have received the information. During the review, we were not informed of any potential negative comments or results.''

The outside audit was ordered after the former manager of the utility, John A. Echols, said the accountants had been paid more than $430,000 over the past year.

The investigation was done by the auditing firm of Coopers and Lybrand of Richmond and Washington, D.C.

The co-op's interim general manager, James Sherfey of Florida, said Tuesday in his second day on the job that records showed a marked increase in accounting fees and irregularities beginning in November 1993, when an earlier general manager, Myron Rummel, resigned.

``We concentrated on that time frame, but we will look back as well,'' Sherfey said. ``I'm not sure we can afford to spend a lot of co-op money in an investigation.''

He said the co-op will attempt to recover unwarranted fees.

About 400 member-customers of the utility had signed a petition asking for a public meeting to discuss problems at the co-op. A spokesman for the members said he was pleased with recent developments.

``But there are still additional unexplained financial matters that need to be looked at,'' said Ward Barnett. Those issues, he said, will be raised during the public meeting at Cape Hatteras School on Feb. 1.

``We're going to let the public speak,'' Barnett said. by CNB