When Mississippi Power Company threatened to take over Coast Electric Power Association in the spring of 1985, NRECA saw it as “a canary in a coalmine.” Investor-owned utilities (IOUs), many flush with cash for the first time in a decade, would go after other co-ops across the country. They had before. (See IOUs on the Prowl, Part 1)
NRECA’s board of directors established a war chest for co-ops that needed additional funds to defend themselves, and Dick Pence, the staff specialist on combating takeover attempts at the ground level, made himself available to any co-op that called.
One of the first calls came from Chariton Valley Electric Cooperative in southern Iowa, where the board of directors recently had been paid a visit by a group of Iowa Southern Utilities Company (ISU) executives. Before the meeting adjoined, the small but deep-pocketed IOU presented an offer.
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After the board rejected the offer, ISU tried a different approach: Would the co-op agree to a joint study looking at mutual gains from a merger that would be “good for the area”? The board rejected that, too.
Next, ISU called each director at home and invited him to tour the company’s generating plants, to be followed by “dinner and discussion.” They also propositioned the directors with monthly payments for advising ISU on “farm procedures.”
Not one director took the bait, and ISU backed off after Pence helped the co-op develop an aggressive media campaign that made it plain the board was strongly opposed to a sell-out or a merger.
“I think they know they could not get the two-thirds-majority vote,” General Manager Norman Braun told the membership at the co-op’s September annual meeting. “But after this, we’ll always be on guard; one year, five years, 20 years from now, they’ll be back. We don’t think they’ll ever give up, but now they know we won’t either.”
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That same spring, a different sort of takeover attempt unfolded farther west. Pacific Power & Light Company (PP&L), a belligerent from earlier co-op/IOU wars, targeted Shoshone River Power, a co-op based in Cody, Wyo. An unusually prosperous distribution system, Shoshone River Power derived 79 percent of its revenue from oil wells. It was practically debt-free and had a lofty Times Interest Earned Ratio of 28.
PP&L, a six-state giant, had developed a takeover manual for its top managers. They were instructed to “establish relationships” with co-op boards and thenkeep pushing until they closed the deal. The manual even told how to gain consumer-members’ trust.
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And PP&L had resources to burn on predatory ventures: It ranked second on Business Week’s list of the top 20 utilities with excess cash, and its parent company, PacifiCorp, would have $500 million in “free” cash over the next five years, according to Value Line.
Still, Shoshone River Power’s board made it easy for PP&L. According to a feature article in the March 1986 issue of RE Magazine, the directors were unanimously in favor of selling out and negotiated a $9.3 million deal with PP&L before announcing their intentions to the membership.
Six months after the board first met with PP&L, the membership voted 1,036 to 99 to sell out. The open-arms dealings and swiftness of the process were unusual in the annals of co-op takeover attempts.
Just the opposite was true 30 miles up the road in Powell, Wyo., where the board of Garland Light & Power Company resisted pressure from the co-op’s industrial consumers to seek a sale proposal from PP&L.
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One of the most celebrated takeover defenses occurred the very next year when Union Rural Electric Association (now United Power) in Brighton, Colo., turned back Public Service Company of Colorado in what became known as the “Battle of Brighton.” More than 100 co-op directors, managers, and other co-op employees from around the country, including NRECA’s Pence, helped organize and carry out a successful anti-sellout campaign.
Jimmy Autry, now vice president of member and community relations at Flint Energies in Reynolds, Ga., went door to door in a trailer park carrying “Save Union REA” signs. “I had rocks thrown at me and dogs turned loose on me,” he recalls. “But it was so rewarding because I learned what my real purpose was as a co-op communicator.”