PEC seeking to absorb Envision by 2010
The move came at the co-op’s regular monthly meeting of the board of directors, which switched locations from Johnson City to Kyle to give more members a chance to attend.
Also during the meeting, the board discussed conservation measures and got a hint about new information concerning the Texland Electric Cooperative.
Meanwhile, Envision Software General Manager Eddie Dauterieve asked co-op directors to give the green-light on a cross-company committee with the goal of merging PEC and Envision sometime before 2010.
“I’m going to request that the board allow myself and (PEC General Manager) Juan Garza to assemble a transition team that will plan and execute the merger with PEC,” Dauterieve said.
Envision drew attention last year after members learned the company — which is wholly owned by PEC — had lost millions of dollars during the past several years.
The company creates and manages the billing software used by the co-op. PEC bought a controlling interest in the company several years ago, then later purchased the company outright. Currently, the co-op is Envision’s only customer. The company’s operating costs regularly top more than $200,000, while its revenue for September 2008 was just $4,800.
Since he was hired by directors in February, Garza has stated his hopes to merge the two companies as a way of saving costs by eliminating some of Envision’s administrative overhead.
Talk of the merger coincided with Dauterieve’s request for $141,000 to pay for annual bonuses for the Envision staff.
“We’ve had a challenging year,” he said. “These are merit-based bonuses for our employees.”
Part of the year’s challenges included a significant upgrade to Envision’s billing software, Dauterieve said, adding all of the company’s employees will receive a bonus.
The board approved the request, along with a further $234,000 to pay for Envision’s November operations.
The board also heard a presentation on a new rate study by C.H. Gurnsey & Co. The study, which is ongoing, aims to set rates that reflect the cost of service, Gurnsey representative David Hedrick said.
“The process that we utilize is the same procedure as when you were regulated,” Hedrick told directors. “We want rates that are non-discriminatory and fair, and we want rates that are based on the cost of providing the service.”
The co-op’s rates were last adjusted in 2004, and Hedrick said increasing power, labor and material costs mean PEC may be overdue for a rate increase.
“Sales to members may not be enough to cover the increased costs,” he said.
Hedrick said the study process will include opportunities for co-op members to have their say, adding that the study will include incentives for the use of renewable energy and conservation.
Conservation plan
Part of that conservation plan includes a board directive that PEC reduce its overall power usage by 20 percent by 2020.
PEC Assistant General Manager Paul Hilgers said implementing that directive will take a shift in thinking by both co-op leaders and members.
Hilgers said the biggest challenge in reaching the director’s goal would be the loss of revenue tied to the 20 percent reduction in power sales.
“What we are presenting here today could potentially change the foundation and fundamentals of who we are as a co-op,” Hilgers said. “Part of what we will have to deal with is the mitigation of the loss of revenue that will result from a 20 percent reduction.”
While the co-op already offers members several conservation measures, Hilgers said those programs won’t be enough to meet the 20 percent reduction goal.
“There’s the reality that there are always trade-offs when you address an important issue,” he said. “These are things we’re going to have to do in the future anyway.”
Hilgers said PEC staff will study conservation methods used by other energy providers — such as Austin Energy — when formulating a long-term power-reduction plan.
Hilgers said another long-term goal — generating 30 percent of PEC’s power through renewable sources by the year 2030 — will present its own challenges.
Currently, the co-op gets about 10 percent of its power from renewable sources, such as wind-generated outlets.
“We’re already a third of the way there,” Hilgers said. “The transmission capability may not be there right now to get the power to our members, but there’s a significant investment across the state.”
New transmission lines are expected to be installed by 2012, he said.
“I think you’ve done a commendable job in identifying all these areas we’ll have to look as we move forward on this conservation plan,” Director Patrick Cox said.
Hilgers said the co-op will continue to seek members’ comments on the issue.
Texland report
Cox also gave a report on the ongoing investigation into the Texland Electric Cooperative, a joint project between PEC and the Bluebonnet Electric Cooperative.
Texland was formed in the late 1970s in order to build new coal-fueled power plants intended to generate energy for both co-ops. Texland was thought dissolved following a lawsuit in the late 1980s until it was brought back to life after the discovery of a $500,000 bank account in the co-op’s name at Cattleman’s National Bank.
PEC officials say they’re still working to determine who the money belongs to, and it was revealed in August that former PEC General Manager Bennie Fuelburg and former board President W. W. “Bud” Burnett were paid about $110,000 apiece from the fund. So was A.W. Moursund, PEC counsel and founder of Cattleman’s.
Cox, who represents PEC on the Texland board along with directors James Williams and Kathryn Scanlon, said recent information uncovered by the co-op may conflict with Fuelberg’s earlier statements.
“We have been able to obtain some financial records from the previous depository where Texland held its account prior to Cattleman’s National Bank,” Cox said. “We are in the process of reviewing those, and we will have a report on that that we’ll give to the Texland board this week. Some of this information is somewhat contrary to the previous information received by us from Mr. Fuelberg regarding the disposition of funds in the Texland account.”
Cox said he’ll have more on the account at this week’s Texland board meeting, set for 3 p.m. Wednesday at LCRA Headquarters in Austin.
chris@thepicayune.com