Depending on who provides your power in Tennessee and your political persuasions, you may be out of luck: most cooperatives donate thousands of dollars to state legislative candidates.
The Internal Revenue Service legally entitles them to do this, through an organization of 23 co-ops called the Tennessee Electric Cooperative Association. The association contributes to candidates through a political action committee.
But TECA officials tell the IRS on 990 forms they don’t engage in any political activity. TECA spokesman Trent Scott wouldn’t say why that is, and neither would a spokesman for the IRS.
These co-ops serve about 1 million customers, according to TECA’s website.
Representatives from some of the co-ops who talked to Tennessee Watchdog said contributions are given to candidates who can help them the most and that ratepayer money isn’t involved.
“It all comes from employee contributions,” said Mitch Kane, spokesman for the New Market-based Appalachian Electric Cooperative. “The money is withdrawn voluntarily.”
Yet even that is unclear, because co-ops aren’t subject to open records laws to allow citizens to verify those statements.
According to the Tennessee Registry of Election Finance’s website, some of the TECA money went to the political campaigns of current Republican Speaker of the House Beth Harwell.
State Rep. Mark Pody, R- Lebanon and State Sen. Ken Yager, R-Kingston, among others, also received PAC money.
The Tennessee Registry of Election Finance’s website reports that many PAC contributions came from co-op CEOs and general managers by name.
TECA itself made a $25,000 contribution to the PAC in 2012 followed by a $12,500 gift the same year, according to the website.
The co-ops that contributed to the PAC since 2012 include:
- The Ashland City-based Cumberland Electric Membership Corporation donated more than $11,000.
- The Trenton-based Gibson Electric Membership donated $10,725.
- Appalachian Electric Cooperative donated $240 in 2013.
Cumberland spokeswoman Julia Wallace would not answer detailed questions sent to her via email. No one at Gibson would respond to messages sent via phone and email.
Tennessee Watchdog submitted several questions via email to Scott, but he ignored many of them and only responded with an emailed statement.
In that email, Scott said TECA complies with all state and federal regulations, meets all of the IRS’s standards for exemption and is also a 501(c)(6).
Nonprofits such as business leagues, chambers of commerce and even professional football leagues qualify for 501(c)(6), according to the IRS website, and they may also engage in an unlimited amount of political activity.
Citing privacy laws, IRS spokesman Michael T. Devine would not comment when asked about a nonprofit that tells the IRS it engages in political activity but does so anyway.
Tennessee Comptroller spokesman John Dunn said comptrollers generally don’t examine a co-op’s finances unless it receives $500,000 or more from the state.
“Electric cooperatives are subject to the regulatory authority of the Tennessee Valley Authority and the Rural Utilities Services,” Dunn said in an email.
When asked about co-ops’ IRS documents and their being subject to open records laws, TVA spokesman Jim Hopson said neither of those areas are part of his agency’s retail regulatory guidance.
RUS is part of the U.S. Department of Agriculture. The service’s spokesman, Jay Fletcher, said states oversee co-ops.
“Cooperatives are established by state, not federal, laws,” Fletcher said in an email. “As a result, whether they are subject to state open records laws, and, if so, under what circumstances, is a state matter.”
Dunn forwarded a copy of a 1997 opinion from then-State Attorney General John Knox Walkup stating co-ops are not public entities and not subject to Tennessee’s Open Meetings Act.
“The Cooperative traces its origin actually to its membership, and not any action by a legislative body,” Walkup said in his opinion.
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