PEC serves Bertram, TX, a tiny dusty community of about 1,400 people in eastern Burnet County. It is the same county where the PEC board president, James Oakley, sits as the county judge. Small though it may be, Bertram was ground zero in a colossal PEC fiasco last week –a mishandling of external communication and a clumsy overreach of Board President James Oakley that embarrassed the coop’s CEO John Hewa, the Board of Directors and the board president himself. It resulted in anger, hurt feelings and a loss of confidence in PEC by many area residents. Sadly, the entire episode could have been avoided.
Here is what PEC Truthwatch has learned. At the first meeting of the newly seated directors last July 21, a resolution was unanimously adopted in open session by the board (including a yes vote by the board president, James Oakley). The upshot of this resolution was to approve what Mr. Hewa referred to as the “Bertram concept”–that is, to “compress” the Bertram district office with Marble Falls and Liberty Hill operations…mostly through the construction of new operations in Marble Falls– as presented by the CEO and staff. The resolution also called for the shutting down of walk-in offices in Lake Travis, Bulverde, Manchaca and Blanco. While the word “compression” is perhaps one of the most ambiguous corporate-speak word choices devised since the military’s “forward retreat”, the board voted for it with the implicit understanding among board members that Bertram would eventually be closed. Board President James Oakley was under no illusions–a review of the video of the July 21 board meeting (available at http://www.pec.coop) reveals no confusion about the board’s intent. It was much discussed and graphics shown by staff made clear what was involved. One board member pointedly asked Mr. Hewa directly, “Isn’t it the CEO’s recommendation to compress Bertram and to take the operations to Marble Falls?”
Paul Graf, who was recently elected and who co-sponsored the resolution with Director Kathy Scanlan understood it. “I see us moving forward here with closing down four offices and compressing the Bertram office as staff can do it and to continue moving forward in constructing a new facility at Marble Falls”, he said. Clear as a bell.
Mr. Oakley has served on the board for two years, was well aware of the extensive facilities study undertaken and understood the CEO’s intent– that the functions of the Bertram office would gradually be absorbed by Marble Falls and Liberty Hill.
To their everlasting credit, the recommendations advanced by Mr. Hewa, Julie Beggs and their able staffs, were in direct response to the board’s overall mandate of reducing costs and lowering rates. This has been one of the bedrock goals of the board, manifest in PEC’s Strategic Plan. This was not an idle goal gathering dust on a shelf. Wheels have been in motion on every level for months to address this goal. Through better management of resources, millions of dollars in savings could be applied toward continued reductions in rates. Members have said for years that PEC rates were higher than those of other co-ops, not without a degree of truth in their claims. Lowering rates has been a top priority. In today’s economy, most businesses either operate efficiently with competitive pricing or they perish.
For years it has been well-known that some district and walk-in offices (and there are a total of 15) provided non-essential or redundant services. The utility deployment work one office was doing in some cases could be absorbed by another office only a few miles away. Over the years these offices, (part of the “house that Bennie built”), became “fiefdoms”. Untouchables. The board wisely decided at some point to take a closer look. It is what boards are elected to do and sometimes it is lonely at the top.
The cost to the cooperative of all these district offices in overhead, real estate and personnel is in the millions. Most district offices are vital and necessary to PEC which has a geographical service area larger than 6 different states. Materiel and resources need to be deployed quickly when service is interrupted. However, the idea of keeping an office open so people can drive over and pay their bills is quickly becoming a quaint relic of the past. Always the goal was to manage this consolidation process by saving jobs through re-deployment, attrition and other means, wherever possible. Mr. Hewa has been very clear about that in his open remarks.
If nature abhors a vacuum, the same can be said of rumors. In the official PEC communication silence that followed the July 21 vote, word got out that Bertram was a target for something. The word on the street was closure. The mayor of Bertram and his wife attended the August 18 meeting of the PEC board where the mayor pleaded against the closing of the PEC office in his small community.
Somewhere along the way, the board president, James Oakley ( in direct contradiction to the board’s action), privately assured the mayor that the office would not be closed. Oakley, along with CEO John Hewa attended a PEC staff meeting at the Bertram office where Mr. Oakley openly made the same assurance. This was news to the board.
The board president also spoke to local media. In a story that appeared in the August 20 edition of the Liberty Hill Independent, the headline read: “PEC: Bertram Office Not Closing”. Mr. Oakley was prominently quoted in the article as if he was speaking for the co-op.
As a result of this article and the ensuing uproar, a community meeting was called in Bertram for Thursday evening, September 3. Mr. Oakley was present. Mr. Hewa was also present as was District 1 Director, Cristi Clement. Mr. Hewa dutifully and patiently articulated the cooperative’s position, its intent and the reasons why PEC endeavored to operate more efficiently–in order to save all members money on their bills. The audience listened to Mr. Hewa respectfully but the meeting turned hostile when Mr. Oakley and Mr. Hewa were asked by one woman, “What brought about this vote?” Mr. Oakley piped up, “Well we really just kind of voted for it on the fly”. On the fly? If true, that sort of flippancy would tick anyone off. It would suggest malfeasance on the part of the board. But it was not true. Mr. Oakley, a likely candidate for re-election to the PEC board in 2016, passionately proclaimed to the home court crowd, “I would never ever vote to close Bertram!” And then he repeated his proclamation for emphasis. Of course, that was not true either. He did vote to do exactly that on July 20.
Mr. Oakley’s actions, at a minimum, suggest the appearance of a conflict of interest on his part. A sitting county judge, representing the interests of his local constituents while sitting as PEC board president seems an inherent conflict on its face. When it interferes with a unanimous decision by the board (that included his vote) the matter goes beyond the pale. His actions have now forced the cooperative to retreat on its Bertram plans. That retreat will likely cost the cooperative many thousands of dollars–a burden to be absorbed by all PEC members.
Here are the takeaways:
- The board president, in apparent contradiction to the policy he voted to approve, interceded (unilaterally) on behalf of Bertram. He now apparently claims that he did not interpret the word “compression” in the resolution to mean closure. Such a claim would suggest incompetence on his part as a video of the July board meeting (www.pec.coop) leaves no doubt about what the word “compression” meant.
- Mr. Oakley made no disclaimer (as he is required to do) when he appeared to speak on behalf of the Cooperative in the August 20 article that appeared in the Liberty Hill Independent. Under the Code of Conduct that all board members agree to follow, no board member can speak for PEC unless authorized by the board to do so. No such such authority was given.
- PEC’s CEO John Hewa was clearly checkmated by his own board president’s unilateral actions, left holding the bag and forced, fait accompli, to comply with Oakley’s statements. The board president effectively threw his own CEO and board under the bus.
- PEC failed to quickly communicate the intent of the Board’s August action and should have anticipated the highly charged and sensitive nature of such an action. They should have gotten out ahead of it. Fast. They failed to grasp an immutable law of communication, that if you do not define yourself, someone else will do it for you. Every time.
- By permitting Mr. Oakley’s actions, the PEC’s board has failed to honor the CEO’s delegation of authority and have further undermined him. The delegation of authority provides great latitude (with prescribed limits) in the CEO’s authority to spend money and speak as one voice on behalf of the cooperative. It was highly improper for Mr. Oakley to intercede in the Bertram matter. Not only should he not have done it, Mr. Hewa would have been well within his authority to demand that Mr. Oakley butt out and then report the matter to the board. Worse, the board has shown no evidence that it intends to reprimand or otherwise deal with this egregious overreach of Mr. Oakley’s authority. He is attempting to preside over the PEC board as a one-man band, as if PEC was an appendage of his Burnet County domain. The rest of the members resent it. The board should put a stop to it.