Valley’s annual meeting comes to a quick close in Pahrump

Editor’s note: This is Part 1 of a series on Valley Electric Association Inc.’s annual meeting. Watch for more on pvtimes.com or in the Pahrump Valley Times print edition. See video with the story on our Facebook page.

Valley Electric Association’s annual meeting came to a sharp close amid accusations of financial impropriety and calls for the board to resign, among other topics.

With individuals lined up at the microphone, Valley’s board president Ken Derschan made a motion for the adjournment of the meeting with much opposition from the hundreds of member-owners and others in attendance at the meeting at Pahrump Valley High School’s gymnasium on Saturday.

“I’m getting tired of all the accusations that everybody’s a liar and that everybody’s lying about everything,” Derschan said in response to some of the comments at the meeting.

The meeting drew to a close when an individual that identified himself as a member of the VEA Members for Change group, actively trying to oust several of Valley’s board members, stated at the microphone that the current board members “should do the honorable thing and resign.” The meeting was quickly adjourned right after by Derschan following his motion to close the meeting and taking a vote of the room.

Several confrontations occurred over a three-minute time limit put on individuals during a question-and-answer session at the meeting.

The meeting wasn’t completely filled with turbulence.

Interim CEO Dick Peck spoke about the results of Valley’s 2018 audit that didn’t bring any wrongdoing to light and a third-party private investigation into Angela Evans, named CEO of Valley in October, that uncovered no “embezzlement.” Evans was put on administrative leave in February following her arrest.

The report of the private investigation into Evans didn’t exonerate her from possibly violating co-op policy, according to Peck. The board of directors is meeting with Evans on Friday, according to a spokesman from the co-op.

Auditor

Also speaking at the annual meeting was David Copeland, a partner at Texas-based accounting firm Bolinger, Segars, Gilbert and Moss LLP.

Copeland read directly from the firm’s opinion of the financial statements on Valley.

“In our opinion, the consolidated financial statements referred to, present fairly in all material respects to the financial position of Valley Electric Association Inc. and subsidiaries as of Dec. 31, 2018 and 2017 and the results of the consolidated operations and cash flows…,” he said. “We issued a clean opinion on those financial statements, which is unmodified.”

The results of the audit, completed in February, were released in early April.

Copeland also spoke about the issues brought up over work orders. Part of the allegations against Evans include that she charged $75,000 worth of work on her personal residence to the co-op.

“Work orders this year, $15 million in work orders were added this year, so we’re looking at the big dollar amounts, so anything that falls under that threshold, we’re not going to catch certain things and especially management override,” Copeland said.

That statement brought Copeland back to the fraud inquiries.

“During our audit procedure, we send upper management fraud inquiries to answer back to us, and we also select employees each year to fill out a fraud inquiry,” he said “Obviously, nothing came back to us in those fraud inquiries.”

Copeland explained that “usually with fraud happening in the organization, usually tips is the main thing that catches fraud. Audits only catch about 6 percent of all fraud. We do our audit procedures.”

He continued stating that, “If we do find fraud, we’re going to let the board of directors know, but nothing came back to us this year, notifying us that there was anything going on that was irregular into the financial statement, so we were able to issue a clean opinion. Obviously, it’s fairly stated.”

Peck iterated that the private investigation and annual audit showed nothing to support the “false allegations” that illegal activity took place at the co-op.

“I want to say, yes, mistakes were made,” Peck said. “I cannot emphasize that enough. There’s not a board or utility manager that can promise stable rates in this day and age when renewables were coming to the forefront.”

Peck pointed to a recent bill passed in the statehouse and signed into law that will require Valley to have 50 percent of the power it acquires to come from renewable sources.

Many member-owners have expressed they were led to believe by former leadership of the co-op that energy rates would stay stable following the sale of the co-op’s 230-kilovolt transmission system that was sold for over $200 million in 2017.

The rate hike for Valley’s residential electric customers of 9.9 percent that went into effect in March gave rise to the Members for Change group. Hundreds of members signed the petition to remove several of Valley’s board members.

Those numbers increased after two search warrants were served at Valley in February over allegations that a financial cover-up of sexual harassment by a former leader took place at the co-op. Those allegations were followed by new accusations of embezzlement and the arrest of Evans.

Change is coming

Peck also spoke about changes that will change the culture of the co-op, including the creation of several new committees. That list will include new foundation, policy and finance committees and a fourth.

“I cannot say enough things about the way we’re changing the culture of this cooperative,” Peck said. “That’s why I was hired.”

“Yes, mistakes were made, but the board met its fiduciary responsibilities,” Peck said at the meeting.

He pointed to the cutting of some $11 million in annual operating expenses and more than three dozen employees from Valley’s payroll.

A special meeting was held right after the annual meeting to discuss the board’s fiduciary responsibilities to the members and the topic of how to remove a member of the board of directors from Valley. Questions have surfaced in recent weeks by members on the topic, following the launch of the Members for Change petition drive.

Contact reporter Jeffrey Meehan at jmeehan@pvtimes.com