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Many investor-owned utilities (IOUs) were flush with cash in the mid-1980s. And this meant only one thing to veteran co-op managers and directors: Predatory IOUs would be on the prowl for co-ops in high-growth areas or with lucrative industrial loads.
Co-op statewide associations were on “takeover alert,” and in Washington, D.C., NRECA’s anti-takeover specialist was ready to leave town on short notice.
By that time, there had been 59 hostile takeover attempts of a co-op, and 12 times the predator had been successful. The most recent was in 1972, when Mississippi Power & Light Company engineered a sell-out vote at Capital Electric Power Association in Jackson, Miss. Now, in 1985, another Mississippi IOU was sniffing out co-op territory.
Alan Barton, president of Mississippi Power Company (MPCo.), a division of the giant Southern Company, invited Henry Thomas to lunch on a warm day in May. After they had ordered, Barton informed Thomas, general manager of Coast Electric Power Association (EPA), that he had just come from a meeting where his board had given him the green light to try to acquire the Bay-St. Louis, Miss.-based co-op.
The IOU chief complained to his lunch companion that MPCo. was hemmed in by Coast EPA, which served the prospering rural areas just outside the Gulf Coast cities of Gulfport and Biloxi. He said he was looking for ways to give “our young executives a chance to grow.” He also may have been exercising an ancient MPCo. grudge against public power: The Tennessee Valley Authority had forced the company to retreat from northern Mississippi in the 1930s.
If Barton sought a sympathetic ear in Thomas, who was then close to retirement, he must have been disappointed. If the IOU president had driven through Bay St. Louis after the meeting, he would have seen a huge “Not For Sale” banner draped defiantly over the co-op’s headquarters.
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Thomas’s staff handed out thousands of bumper stickers with the same message as well as anti-sellout brochures. All 35,000 co-op members received a letter that opened, “War has been declared on your business,” and then it went on to accuse MPCo. of attempting to bribe the co-op’s membership with lower rates.
Meanwhile, the board of directors passed a resolution instructing “management and employees to consider the efforts of Southern Company to be a hostile takeover of a local corporation and to resist to the fullest any such attempts.”
A hard-hitting media campaign that summer and fall characterized MPCo.’s behavior as “The Big Power Grab.”
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MPCo. officials began back-peddling, pointing out to anyone who asked that the company had made no offer to buy out the co-op. An MPCo. spokesman was petulant when a local newspaper reporter asked him to comment on Coast EPA’s ads. “They’re trying to inject emotion in it … insinuate we’re doing something sneaky.”
The sell-out threat had fizzled by the time the co-op membership gathered for its annual meeting in October. Not a single person in the room wanted the co-op to ask MPCo. to make an offer.
This was also a victory for the NRECA board of directors, which, at its June meeting in Washington, had adopted a strongly worded resolution recognizing the seriousness of MPCo.’s takeover threat. If successful, it “would jeopardize the existence of rural electric systems throughout the country.”
Next month: Investor-owned utilities go after co-ops in Wyoming, Iowa, and Colorado.