Our bylaws – the rules by which the Cooperative is governed – were written when the Cooperative was incorporated back in the mid-1960s. It was one of the first tasks of VEA’s first Board of Directors. Bylaws provide a stabilizing influence by laying down a road map for the Cooperative’s actions, including how it will communicate with members, what records must be kept, the governing process, board elections, the rules for approval of contracts, loans, rules for changing the bylaws and other matters.
Bylaw Revisions Faqs
Because as times change, the needs of the members change. For instance, who could have imagined even a decade ago that VEA would be in the high-speed communications business? Yet here we are – all because our members needed critical communications infrastructure and no one else was stepping up to provide it. The bylaws changes revolve around VEA’s decision to provide other services like communications.
Several Articles in the bylaws would be revised. The majority of the proposed changes are interrelated and are needed to protect VEA’s tax-exempt status under IRS rules. The most significant of these revisions are in Articles I – III, as well as Article VII, and they address the need to include language that protects Valley Electric’s tax-exempt status now that broadband is among the services we provide to members and those outside of our service territory. We want to make sure that selling broadband does not change how we’re treated under tax laws.
Another important and closely related effect of these changes is to ensure, that members who take electric service retain control and voting rights of the Cooperative, rather than consumers of broadband, who might live outside our territory and do not purchase power. Likewise, we must ensure that in the years ahead patronage capital earned because of margins from broadband services is allocated back to broadband patrons, much as margins from electric service are allocated back to members.
The changes require a “yes” vote from two-thirds of those who vote. Further, at least a quorum of the membership (2 percent) must vote before any changes can take effect. A quorum of VEA’s membership would be 350. The last time a bylaws change was voted on (2011), approximately 1,000 members voted (about 5 percent). For the changes to pass, the outcome would require a “yes” vote from two-thirds of however many people vote, provided at least 350 members vote. For example, if 1,000 members vote, 667 would have to vote “yes.”
Because the primary purpose of the amendments is to protect VEA’s tax status, most of the proposed amendments were originally drafted by VEA’s independent auditor who is a national expert on cooperative tax structure, and tax exemptions. The Ambassador Bylaws Committee, composed of owner-members, reviewed and voted to support these proposed amendments, and submitted several additional recommended bylaws changes to VEA.
These recommendations, along with recommendations submitted by the staff and legal, were reviewed by the Board of Directors during the December 2017 meeting. These changes were specifically deemed critical and were approved by the Board for a vote by the members.
Other, less-significant changes would:
- Change the number of candidates that shall be nominated for each district in which a Director is to be elected to a minimum of one and a maximum of three from that District in cases where no one else from that District submits interest in being considered for nomination. Previously, the Nominating Committee was required to nominate either two or three, and this created serious problems in some of the smaller districts, where it is frequently the case that only one member wishes to run for the district’s Board seat. This change will not affect the process for elections and nominations in larger districts where a number of members typically run for Board seats.
- Define those employees for which the Board of Directors is required to set the powers, duties, and compensation to the Chief Executive Officer and General Counsel. This change creates consistency throughout the Bylaws and VEA policy implementing the Bylaws.
The bylaws remain as they are today, which could create tax and ownership conflicts down the road.
Voting begins on March 21 and runs through the Annual Meeting (April 28). Members can vote by mail-in ballot, online, by phone, or by proxy. Members also can drop off a completed ballot at the VEA offices in Pahrump. The voting process will be conducted by SBS, a Minnesota-based company that manages elections for cooperatives across the country.
The complete list of the bylaws changes can be found elsewhere on VEA’s website. Questions will be addressed at each of the six district meetings, which will be conducted in March. Any member is welcome to call with questions (775) 727-5312 or to make an appointment to visit with someone at the Cooperative to get questions asked.
No VEA employee will receive a pay raise if the revisions pass. VEA does not pay bonuses under any circumstances.