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Electric co-ops are holding onto millions that belong to Coast customers, lawsuit says

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South Mississippi electric cooperatives are keeping millions of dollars that belong to their ratepayers, lawsuits filed in U.S. District Court claim.

The lawsuits say that both Singing River and Coast Electric power associations provide modest rebates to placate customers when the unregulated, nonprofit companies should be returning far higher amounts, based on their reserves.

Jackson law firm Cosmich Simmons & Brown filed the lawsuits on behalf of 55,517 Singing River customers and 79,000 Coast Electric ratepayers in South Mississippi. The lawsuits are two of seven Cosmich has filed against electric cooperatives in Mississippi.

Under state law, the cooperatives can retain enough money to cover expenses and debt payments, and maintain adequate reserves. The lawsuits say 30 percent of assets are considered adequate for reserves. State law mandates that excess revenue be returned to ratepayers through reimbursement of membership fees or rate reductions.

Singing River Power Association had more than $149,643,679 in “patronage capital” at the end of 2016, the lawsuit says, with an additional $60 million invested in associated organizations. The revenue amounts to 41 percent of Singing River’s assets, the lawsuit says.

“These lawsuits are designed to make plaintiffs’ lawyers money at the expense of co-op members,” Audrey Young, a media representative for the power associations, said in an email. “Electrical co-ops are required by law to hold capital in reserve in order to fund vital infrastructure repair and upgrade when needed.

“Capital reserves are set aside to benefit all Co-op members and when a member sues for depletion of infrastructure capital reserves, the membership is forced to expend precious resources to defend against a raid on critical capital needed to provide reliable, safe and affordable electricity.”

Young said the expense of the lawsuits could result in rate increases.

The lawsuits ask that presiding Judge Louis Guirola Jr. set up a trust so that excess funds can be returned to ratepayers. Returning excess funds would have no affect on the association’s ability to function, the lawsuits say.

Singing River serves customers in seven South Mississippi counties: Harrison, Jackson, George, Greene, Perry, Stone and Wayne.

“Retaining member equity is a form of coerced borrowing that occurs when electric cooperatives charge their member-owners more than its services actually cost,” the lawsuit against Singing River says. “This coerced borrowing is a very bad deal for member-owners.”

The Coast Electric lawsuit says the company serves 79,000 customers. Coast Electric covers rural Hancock, Harrison and Pearl River counties. The lawsuit says Coast Electric has $158,181,000 in member money held as “patronage capital,” which is equal to 45 percent of its assets.

Coast Electric could return $53 million to ratepayers, the lawsuit says, and remain stable.

Attorneys filing the lawsuits want to be reimbursed legal and expert fees, plus other costs associated with efforts to recoup money for ratepayers.

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