4 May 2009
Candidate Response: Larry Landaker
Why do you wish to serve as a Director of PEC?
I no longer wish to watch from the sidelines as PEC’s member interests remain jeapordized by a Board seeking to protect the status quo and business as usual in Johnson City. I believe the Cooperative’s business to be the business of its member-owners. The history of the PEC has been a history of secrecy, lack of accountability and expanding board power. That era is over, even though some holdover members do not yet realize it. I wish to bring about true financial accountability. I do not believe the PEC is operating as efficiently as peer cooperatives. I doubt that we are taking full advantage of an economy of scale as America’s largest electrical cooperative. As a former television executive in one of the most competitive industries in the world, I understand the pain involved in managing costs and I understand the proclivity of management to resist lean operations.
Please explain what you see as the proper role of a Director of PEC.
No board member should meddle in the day to day management of the cooperative. If we have hired excellent management, they should be free to operate. The proper role the Board is one of management oversight. I believe a Board’s duty is to listen to management and gain their perspective on all matters. Conversely, as Board members are sensitive and tuned to the political winds of the membership, they must guide and support management. Ultimately, the Board must then articulate clear, measurable, time-bound performance objectives to management that reflect the objectives and needs of the cooperative members. The Board must be prepared to hold management fully accountable. However, the Board must likewise be prepared to reward management for meeting or exceeding key objectives. Management and Board must understand that it is the member-owners who set the agenda for the company, not the other way around. That may be a difficult concept for some to grasp.
What do you see as the one or two greatest challenges facing PEC in the next year?
First, we must gain the upper hand in controlling costs. They are spiraling. Legal and accounting expenses have cost us dearly and there may be more to come. But we cannot keep raising rates. The wolf is at the door. Management and the board face tough decisions on controlling costs, particularly in the area of general and administrative and consumer accounting. Second, the Board must begin sewing the seeds of a new credibility with the membership. This is going to be a difficult task as there exists a near total lack of credibility now. Passage of Board member term limits and passage of a meaningful Members Bill of Rights would be a good start.
There are currently pending two legislative bills in Austin regarding the governance of electric co-ops in Texas. One is known as the Rose/Fraser Bill (HB1390 and SB 921) and the other is the Swinford Bill (HB 3820). The PEC board voted on April 6 to support the Swinford Bill and to oppose the Rose/Fraser Bill. If you had been a Director, how would you have voted and why?
I favored the Fraser-Rose bill and would have voted for it. I am for any bill that codifies the open meeting, open records actions the Board has approved, but could take away on a future whim. The Board actions of the past prove the Board cannot be trusted. They wish to be trusted but have shown not a particle of regret about the ethical train wreck over which they presided. I believe the PEC Board made a huge strategic error in going to Austin to publicly oppose Fraser-Rose. I am disappointed that Mr. Garza lent his considerable credibility to this losing proposition. It might have been reasonable to testify “on” the bill but not to oppose it. This was yet another critical decision made by the Board in opposition to our members’ best interests. The Board’s impulsiveness and arrogance may now result in a more onerous bill than even advocates of reform may have intended.
Some members have advocated what they call a “Bill of Rights” for PEC members. Basically the idea is to require that certain aspects of governance such as fair elections open to all members, Open Meetings, and Open Records provisions can be changed only by a vote of the members, not by a By-law change adopted by the board of directors. Do you view this as a good idea? Please explain briefly.
Of course this is a good idea, so long as it is a meaningful Bill of Rights with teeth and can be changed only by a vote of all members, not by a By-Law change adopted by the Board. I will introduce such a resolution if I am elected.
What role, if any, do you feel PEC should play in promotion of so-called “distributed generation” of electricity by members (solar panels, wind etc.)?
My impulse is to favor investment in smart-grid technologies to improve service, increase efficiency and provide incentives to customers who use solar and wind. When a revolution is in progress, one can either lead, follow or get out of the way. The largest electrical cooperative in America, in my opinion, should lead.
Based on the information available to you as a PEC member and candidate for Director, how would you rate the financial condition of PEC – strong, adequate, basically sound with a few problems, precarious, or other description. Please feel free to explain briefly.
How about giving it a grade? I would grade it a B- for now. According to the Navigant Report, “while the Cooperative’s operating revenues have increased significantly, certain of its controllable expenses (i.e., Administrative and General Expenses) were increasing by even more.”
Even more compelling is the judgment of Fitch, Inc. who downgraded the Cooperative’s recent bond rating, saying, “The downgrade to A+ reflects ongoing pressures on PEC’s new management team and Board of Directors to implement management reforms and cost controls in response to past management practices and excessive costs.”
All arrows point to the need to control costs. I will come on the board prepared to do that. I am also concerned that we have not implemented a strategic plan…or a capital investment plan.
Should PEC adopt term limits for Directors?
Yes. And how many terms? A good and reasonable balance must be struck. We want seasoned experience with valued institutional memory in Directors. The question of how many terms warrants a healthy debate and some consideration.My mind is open on the matter. But this I do believe. Lord Acton had it right. Power corrupts and absolute power corrupts absolutely.
Do you think the cooperative model for electricity distribution service, first adopted in the 1930s, remains a viable model for the 21st Century? Please explain your views briefly.
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If we mean that member-owned cooperatives are firmly rooted in the communities they serve and are truly democratically governed businesses, then yes, I believe the cooperative model is viable. When cooperatives become fiefdoms for powerful boards who ignore the will of the members and operate in secrecy, then my answer is no.
It also strikes me that we must consider whether it is in our interest to advocate conservation or consumption. We seem to be trying to have it both ways. Let us look to which way the winds are blowing. Do the winds favor unbridled energy consumption or conservation? Clearly they favor conservation. Should we reward people who conserve energy with a lower rate? Or should the reward go to the heavy consumer? We need to pay attention. We can no longer be one size fits all.
Please take all discussions to the Candidate Forum.
2009-05-04 ::