Following are questions revolving around proposed changes to Valley Electric Association’s bylaws. The revisions were suggested by auditors with input from the VEA Ambassador Program. Changes were approved by VEA’s Board of Directors. For more information, please see VEA’s website at www.vea.coop. Voting on the revisions begins March 9 and will continue through the Annual Meeting on April 28.
What are bylaws and why do we need them?
Our bylaws – the rules by which the Cooperative is governed – were written when the Cooperative was incorporated back in the mid-1960s. It was one of the first tasks of VEA’s first Board of Directors. Bylaws provide a stabilizing influence by laying down a road map for the Cooperative’s actions, including how it will communicate with members, what records must be kept, the governing process, board elections, the rules for approval of contracts, loans, rules for changing the bylaws and other matters.
Why do we need to change them occasionally?
Because as times change, the needs of the members change. For instance, who could have imagined even a decade ago that VEA would be in the high-speed communications business? Yet here we are – all because our members needed critical communications infrastructure and no one else was stepping up to provide it. The bylaws changes revolve around VEA’s decision to provide other services like communications.
Which bylaws would change and why?
Several Articles in the bylaws would be revised. The majority of the proposed changes are interrelated and are needed to protect VEA’s tax exempt status under IRS rules. The most significant of these revisions are in Articles I – III, as well as Article VII, and they address the need to include language that protects Valley Electric’s tax-exempt status now that broadband is among the services we provide to members and those outside of our service territory. We want to make sure that selling broadband does not change how we’re treated under tax laws.
Another important and closely related effect of these changes is to assure, that members who take electric service retain control and voting rights of the Cooperative, rather than consumers of broadband, who might live outside our territory and do not purchase power. Likewise, we must assure that in the years ahead patronage capital earned because of margins from broadband services is allocated back to broadband patrons, much as margins from electric service are allocated back to members.
How many votes are necessary for the changes to take effect?
The changes require a “yes” vote from two-thirds of those who vote. Further, at least a quorum of the membership (2 percent) must vote before any changes can take effect. A quorum of VEA’s membership would be 350. The last time a bylaws change was voted on (2011), approximately 1,000 members voted (about 5 percent). For the changes to pass, the outcome would require a “yes” vote from two-thirds of however many people vote, provided at least 350 members vote. For example, if 1,000 members vote, 667 would have to vote “yes.”
[How were the changes drawn up?
Because the primary purpose of the amendments is to protect VEA’s tax status, most of the proposed amendments were originally drafted by VEA’s independent auditor who is a national expert on cooperative tax structure, and tax exemptions. The Ambassador Bylaws Committee, composed of owner-members, reviewed and voted to support these proposed amendments, and submitted a number of additional recommended bylaws changes to VEA. These recommendations, along with recommendations submitted by the staff and legal, were reviewed by the Board of Directors during the December 2017 meeting. These changes were specifically deemed critical and were approved by the Board for vote by the members.
Are there any other changes?
Other, less-significant changes would:
- Change the number of candidates that shall be nominated for each district in which a Director is to be elected to a minimum of one and a maximum of three from that District in cases where no one else from that District submits interest in being considered for nomination. Previously, the Nominating Committee was required to nominate either two or three, and this created serious problems in some of the smaller districts, where it is frequently the case that only one member wishes to run for the district’s Board seat. This change will not affect the process for elections and nominations in larger districts where a number of members typically run for Board seats.
- Define those employees for which the Board of Directors is required to set the powers, duties and compensation to the Chief Executive officer and General Counsel. This change creates consistency throughout the Bylaws and VEA policy implementing the Bylaws.
What happens if the changes don’t pass?
The bylaws remain as they are today, which could create tax and ownership conflicts down the road.
How will voting take place?
Voting begins March 21 and runs through the Annual Meeting (April 28). Members can vote by mail-in ballot, online, phone or proxy. Members also can drop off a completed ballot at the VEA offices in Pahrump. The voting process will be conducted by SBS, a Minnesota-based company that manages elections for cooperatives across the country.
Where can I learn more?
The complete list of the bylaws changes can be found elsewhere on VEA’s website. Questions will be addressed at each of the six district meetings, which will be conducted in March. Any member is welcome to call with questions (775-727-5312) or to make an appointment to visit with someone at the Cooperative to get questions asked.
Will anyone get a pay raise or bonus if changes are passed?
No VEA employee will receive a pay raise if the revisions pass. VEA does not pay bonuses under any circumstances.
How important are the proposed changes?
Very important. The major changes have been suggested by VEA’s auditors to protect the Cooperative’s tax-exempt status now that VEA offers services besides electricity, principally broadband and internet services. The revisions also would assure that only those connected to VEA’s electric service have membership voting rights.
Why do all changes need to be passed together?
The most significant changes are interrelated, so it makes the most sense to get an up-or-down vote on all the revisions. In addition, the process of communicating the changes to members is expensive due to considerations of time, printing, postage, etc.