[Watchdogs] Judge Slams CoServ

[iMark Glover]

For Immediate Release

Contact: Tim Crouch 940-383-1990

 

16th District Court Judge Slams CoServ Electric in Class Action Suit

 

Denton, TX -  June 15,2009

Leaders of the effort to bring reform to CoServ Electric praised the
decision of District Court Judge Jerry Woodlock today after he rejected an
attempt by attorneys for Coserv to sever the class action case filed by
reform director Mark Glover and additional CoServ members against the
electric provider.  Judge Woodlock dealt an additional blow to CoServ's
attempts to delay action on the class claims when he set an August 31, 2009
trial date to hear both the original lawsuit and the putative class action
suit.

 

The class action lawsuits on behalf of CoServ Electric's over 140,000
member-owners are part of a nationwide rural electric cooperative movement
aimed at reforming an industry that dates back to the days of Franklin
Roosevelt's New Deal.  "You are witnessing the birth of transparency and the
rebirth of the cooperative electric revolution", said CoServ Reform Director
Mark Glover, "As before it's about the rights of the member-owners to have
cost-effective electric power and control over their own destiny."  Reform
advocates are calling for dramatic changes to laws governing rural electric
cooperatives.  

 

CoServ Electric was established in 1937 as the not for profit Denton County
Electric Cooperative.  The company's founding principle is to provide member
owners with electricity at cost.  The national and statewide reform movement
is challenging actions of electric cooperatives that have strayed from those
founding principles and allowed cooperatives to enter into other for-profit
business ventures.  Denton County Electric Cooperative changed its name to
CoServ Electric in the 1990s as part of its new vision for a diversified
electric cooperative, but was forced into $1 billion bankruptcy in 2001
after a series of failed for-profit businesses and speculative real estate
investments.  Reformers say that CoServ has not reformed and continues to
make risky investments that are outside of the principle of providing
electric service to its members at cost.

 

"The primary issue of this class action suit is the fiduciary responsibility
of CoServ Electric and its Board of Directors," added Glover.  "CoServ is
taking the member's hard earned money without their knowledge or consent to
make risky investments of the type that led to the bankruptcy only 8 years
ago."  Similar lawsuits are pending against other electric cooperatives in
Texas, Arkansas, New Mexico and Tennessee.  Reform legislation passed in the
Texas Senate during the 2009 legislative session but never reached a House
vote due to partisan bickering on the Voter ID Bill.  Nationally, California
congressman Henry Waxman has been conducting hearings on the industry and
has indicated plans to file a reform bill on electric cooperative
governance.

 

The August 31st trial date will be in Denton County's 16th district court.
The case will be tried by visiting Judge Jerry Woodlock.

end

 

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