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September 13, 2012

Effort underway to oust RECC chairman

Stephens targeted by petition circulating in community and online

WHITLEY CITY —  A McCreary County businessman has come under fire for alleged wrongdoing while chairing Kentucky’s largest rural electric cooperative.

    Rick Stephens, who has served on the board of the South Kentucky Rural Cooperative Corporation (SKRECC) for 36 years and chaired it for the last 12, is the target of a recall effort which began late last month with the launch of a web site called “Save SKRECC” at www.saveskrecc.com.

    The campaign is being spearheaded by other area businessmen — H.E. Corder II of Science Hill, Frankie L. Nelson and John W. Tuttle of Somerset and William Singleton of Stearns.

    Tuttle said the people who want Stephens out are not accusing him of illegal activity but some board decisions under Stephens don’t “pass the smell test.”

    The petition cites examples of Stephens’ alleged conflicts of interest, including that he pressured co-op employees to buy auto parts from a Whitley City store he owned based on a bid then raised prices.

    In relation to co-op property, Tuttle said SKRECC sold the old McCreary County office to a man with whom Stephens had done business, who then leased the property to Stephens.

    Deed records from February 2004 show that SKRECC and LEL, Ltd. participated in a land swap valued at $240,000 in which the old office was exchanged for the property on which a new office was constructed.

    For $1,080,000, the co-op also bought 83.6 acres of land in Pulaski County in the spring of 2003 to build a new office. A company called Speculative Ventures had bought the property less than four months earlier for half that amount, according to deed records. According to Commonwealth of Kentucky Secretary of State Alison Lundergan  Grimes, Speculative Ventures is owned by Blaine S. Correll Sr. and Blaine S. Correll Jr. of Somerset.

    The Kentucky Public Service Commission denied SKRECC’s request to build an $18 million office there in 2009 but later approved a less costly facility which has yet to be built.

    The petition also said that the co-op board members have taken retreats resulting in excessive expenses while co-op customers are facing higher hates. According to Tuttle, the board went to New Orleans last year without senior managers.

    “The charges are groundless,” Stephens told The Record. “They have singled me out when the full board voted on these issues. If you know how boards work, you know that no one person has that kind of authority.”

    Stephens questioned why the allegations are surfacing now when the property and bid issues date back to 2004 and 2005, respectively. The parts bid, he added, was looked at by the PSC and Attorney General as well as supported by management.

    “There are minutes and motions to support this,” Stephens said. “If it was bad then, there would have been an issue then.”

    For his part, Singleton said that he has felt for some time that a change needed to be made and agreed to be part of the petition drive when asked.

    “What I would like to see is that the co-op is run in the best interest of its members,” Singleton said. “We’re just looking at the facts on public record.”

    Singleton, who said he has not ruled out running for Stephens’ board seat, also expressed concern about reports that SKRECC CEO Allen Anderson’s job had been jeopardized by recent conflicts with the board.

    In mid-August an impromptu rally was held in support of Anderson at the Somerset office, where a meeting of the board of directors was being held.

    Anderson acknowledged Stephens had disagreed with him on certain business decisions and that other board members became upset during the last board election in June when some RECC workers became “actively involved” and an incumbent was defeated. The CEO maintained that since many employees are also members, they had the right to be involved as long as it was not on company time.

    “It’s an unfortunate situation which we all hope to resolve so we can serve our members,” Anderson said. “You can’t forget that the co-op members have a right to ask questions and hold us accountable.”

    Anderson also expressed concern for SKRECC’s employees, many of whom do dangerous work. “Our employees like to feel secure and appreciated. It’s been a trying time to keep morale up when conflict set in between me and the board,” he said.

    Serving on the SKRECC board with Stephens are vice-chairman Charles Gore of Russell County, secretary/treasurer Rick Halloran of Pulaski County, Bill Shearer of Clinton County, Billy Gene Hurt of Wayne County, Lee Coffey of Lincoln County and John T. Pruitt Jr. of Pulaski County.

    A seat on the SKRECC board carries an array of lucrative benefits including insurance, retirement and convention junkets. Compensation varies among board members but Stephens, who term expires in 2015, received $29,177 last year according to PSC records. His compensation since 1997 totals more than $325,000.

    SKRECC is one of 19 co-ops regulated by Kentucky’s PSC, 16 of which distribute power generated by Winchester-based East Kentucky Power Cooperative. PSC records indicated that board members for four of those utilities are not compensated.

    SKRECC serves some 50,000 member/owners (more than 66,000 meters) in the Kentucky counties of Pulaski, Russell, Wayne, Clinton, McCreary, Casey, Lincoln, Adair, Rockcastle, Cumberland and Laurel as well as Pickett and Scott counties in Tennessee. Members accumulate capital credits (shares in profit above operating costs) yearly but the last co-op wide disbursement was in 2005.

    The petition regarding Stephens is seeking 5,000 signatures (10 percent of membership) in order to hold a special meeting on or about December 6 at Southwestern High School in Somerset. If the meeting is called, co-op bylaws indicated that one percent or 500 members must be in attendance to take any action. Both sides would have a chance to present their cases before a vote is held.

    For those without online access, petitioners have purchased ad space in this week’s edition. Hard copies may also be signed or dropped off at Larry’s Mini Mart, Boris Haynes Gulf, Courthouse Corner Coffees and Cafe, and Ole Country Cafe.

    The Associated Press contributed to this article.

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