THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Friday, February 3, 1995 TAG: 9502030582
SECTION: LOCAL PAGE: B1 EDITION: NORTH CAROLINA
SOURCE: BY LANE DEGREGORY, STAFF WRITER
DATELINE: BUXTON LENGTH: Long : 114 lines
In the past month, officials with the Cape Hatteras Electric Membership Cooperative have fired the accountants who kept their books for more than 15 years; sued the accounting firm for $700,000 in damages; and hired an interim manager who has decades of experience in running rural electric cooperatives.
That's not enough, co-op customers said Wednesday night.
At a special meeting which members demanded through a petition, more than 300 Hatteras Island residents turned out to ask questions, receive answers and offer suggestions to power company employees.
Spectators packed the Cape Hatteras School auditorium for the three-hour evening meeting. After two hours of prepared presentations from power company officials, members finally took the floor.
Some asked co-op leaders to develop a budget for 1995, since the power company does not currently have one. Others wanted to know about costs of hiring a Virginia Beach public relations firm and commissioning a survey. Most seemed anxious for explanations about expenses incurred over the past 12 months.
``I in no way doubt the honesty or integrity of any board member of the Cape Hatteras EMC. But we have a lack of confidence with the management and the judgment they've shown in some decision making - especially over the last year,'' said Frisco resident Jack Leatherwood, spokesman for the Concerned Citizens for Responsible Utilities Committee.
``How $450,000 in bills from Johnson and Dooley accountants could go through the entire EMC- the clerks, the managers, the board members - and be paid seemingly without challenge is hard to believe,'' Leatherwood said. ``Had it not been for one individual, there's no telling how long this would've gone on without the knowledge of the membership.''
On Oct. 18, former utility manager John A. Echols resigned after less than four months on the job. Power company directors were meddling in daily operations too much, he said. There was improper spending, he said.
Upon his departure, Echols released documents showing that Cape Hatteras Electric officials had paid their Virginia accounting firm more than $430,000 over the past year.
Last month, representatives with an outside audit firm presented preliminary findings showing that the accounting firm, Johnson and Dooley of Danville, had overcharged the power company more than $100,000 since November 1993. Co-op directors unanimously voted to fire the accountants - then filed a lawsuit against the firm, requesting at least $200,000 in compensatory damages and $500,000 in punitive damages and attorney fees.
Cape Hatteras Electric serves all Hatteras Island residents and businesses. The non-profit, tax-exempt co-op employs about 20 people full time. It is owned by its 3,825 customers.
``Echols' allegations turned out to be true. But none of you - not the employees, not the office manager, not any one of the directors - said, `Whoa. Let's stop this here and see what's going on.' None of you had the courage to stand up and tell the members what was happening,'' said Frisco resident Ward K. Barnett, also a member of the citizens' committee.
Gray, who has served on the power company's nine-member board for 18 years, said he ``can't answer'' questions about his own intentions to remain with the co-op.
``I thought the meeting went very well,'' Gray said from his Buxton home Thursday.
For the first hour of Wednesday night's gathering, power company officials projected charts and figures onto a wall screen, showing progress of a new 115-volt electric line being installed on the island, and explaining other co-op business. The new electric line was estimated to cost about $24 million, officials said. The estimate is now $10 million, in part because of cost-saving measures that have been implemented during construction, said the co-op's engineer.
The second hour of the meeting was spent detailing results of a membership survey, which the co-op's public relations firm suggested. So far, power company officials have paid the Virginia Beach consultants about $22,500. The survey cost members an additional $24,000.
``We got 1,100 responses from the 3,900 surveys we mailed,'' said N.C. State Professor Larry Long, who helped tabulate survey results. ``That's a phenomenal number of returns.''
According to Long, about 65 percent of the survey respondents said they want to receive more information about their electric co-op. The same percentage think that their power rates are too high. About half feel that the directors don't make decisions in the members' best interest.
The biggest problems at the co-op, survey respondents said, are the board members, charges for various services and poor customer relations.
Interim power company manager James Sherfey moderated the meeting and assured co-op members that he would work to improve their service.
He detailed summer and winter electric rates, explaining the extra costs of running power to a barrier island. He told members that if they chose to sell or merge their co-op with another power provider, the board could look into that option.
He defended all salaries at Cape Hatteras Electric, saying the current wages are ``within the state average range.''
Some co-op members have criticized what they consider to be high wages being paid to power company Assistant Manager Claudine Williams. Wednesday night, Cape Hatteras Electric officials confirmed that Williams earns $65,412 annually. The state average for her position is $73,824.
``I ask the Board of Directors to study Williams' high salary,'' Barnett said Wednesday night. Another resident asked board members to look at linemen's low wages. And a builder requested incentives to construct energy efficient homes.
Power company officials could not answer several of the questions audience members asked during the meeting. They did not know the cost of the gathering - which lasted until almost 10:30 p.m. They did not know how long they plan to keep paying the public relations consultants. And they could not explain why generic bills from the accounting firm were not sent back for additional details before the power company paid them.
``Those invoices were never questioned,'' Sherfey said. ``That's not the best way to use a professional firm, I admit. In the future, there will be different reviews of our bills before they are paid.''
After the sometimes emotionally charged meeting, residents had different reactions to their power company officials. Most people seemed glad they had the opportunity to address the elected leaders first-hand. But many said they were disappointed with the way the gathering was structured. by CNB