Pioneer, REMAC reach agreement

Published 12:00 am Wednesday, July 20, 2005

Pioneer Electric Cooperative and members of Rural Electric Member Action Committee (REMAC) have both announced a forthcoming settlement in the lawsuit first filed in Feb. 2004.

The lawsuit, brought by the late Wendell Phelps of Butler County, Hoffman Rhyne of Lowndes County and Kenneth Stallworth of Wilcox County, alleged gross mismanagement of the cooperative's funds and that management made poor business decisions that brought the cooperative to the verge of insolvency.

At a meeting Saturday, REMAC's officers and their attorney touted the proposed agreement as a partial victory for the group.

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REMAC President Margaret Pierce told those in attendance that the group's list of goals continues to shrink now that ACME Propane has been sold and PEC's executive vice-president and general manager Malloy Chandler has announced his retirement.

"(Chandler) will be leaving as manager of PEC on January 5, 2006, but he will be available to the new manager for the six months following that date as a paid consultant," Pierce said.

"Also, he will receive 18 months of paid vacation time, which includes an additional amount of money in order to cover health insurance for his wife and himself until the age of 65."

Terry Wilhite, spokesman for the cooperative, cited the court's gag order and said nothing has been signed, nor has the court given its consent.

"The settlement agreement has not yet been signed by all the parties, nor approved by the court," he said.

"Until that happens, Pioneer will continue to abide by previous court instructions to refrain from commenting on the case.

The proposed settlement agreement provides that the parties will hold a joint press conference to release the terms and conditions of the settlement.

Until all the parties have signed off on the agreement, it would be improper to comment."

Wilhite went on to say that Chandler's retirement was planned prior to the lawsuit being filed.

"Malloy was scheduled to retire in January of this year," he said.

"Since the lawsuit was pending, the board asked that he continue his duties until the case was concluded. As the case appears to be settled, Mr. Chandler has indicated to the board and the employees of the cooperative that he intends to retire in January, 2006."

J. Doyle Fuller, one of three attorneys representing REMAC members, agreed that the suit had not yet reached it's conclusion, but that both parties had an agreement in principal.

"It has not been finalized yet, but we have reached an agreement for a proposed settlement with Pioneer Electric," he said.

"Given the risks of the uncertainty of litigation, it is in the best interests of our clients and the cooperative to agree to this settlement."

As for who will replace Chandler, Fuller said REMAC would play a role in who it will be.

"When it comes to the hiring of a new manager for PEC, there will be a screening committee consisting of three Pioneer Electric board members and two REMAC members," Fuller said.

"These five will interview all the applicants and choose their top three choices.

These three individuals will then be submitted to Pioneer's board of directors, who will then make the final managerial choice."

REMAC said another issue that has long bothered many members is that the public is not allowed to attend PEC board meetings.

Fuller said, as a result of the proposed settlement, that would change.

"REMAC will have two representatives at every PEC board meeting," he said.

"They can have input, be involved in discussions in the meetings, they can ask questions, and they will be included in every executive session.

Even though these two representatives cannot vote at the board meetings, they must be present."

Fuller went on to explain that although 18 months ago he felt Pioneer Electric was in serious financial trouble, he believes it has a good chance now to survive.

"I believe we're getting more with this than if we had gone to court," he said.

"We've gotten the best deal possible.

All of this is the product of a lot of hard work.

Our goal in this whole litigation was to salvage this cooperative and get it on sound financial footing."

Many REMAC members at the meeting wanted to know when they would see a difference in costs and adjustments of kilowatt-hours. Since its inception, REMAC has claimed PEC's rates were some of the highest in the country when compared to other cooperatives.

"Hopefully, in a year or two," Fuller said of any downward rate adjustment.

Pierce said that REMAC's number one priority was to "save Pioneer Electric."

"We need to get PEC back in the hands of its members," she said. "There are approximately 12,000 members who receive services from Pioneer Electric in Butler, Lowndes, Dallas and Wilcox counties.

So many of these people are being charged outrageous prices for Pioneer's services."