Tuesday’s arrest of Valley Electric Association CEO Angela Evans came as a surprise to some in the Pahrump area, but some members say distrust of the electric cooperative had been on the rise for weeks.
Suspicions about the utility first cropped up among some of the cooperative’s roughly 17,500 members earlier this month, after it suddenly announced rate hikes to take effect in March, despite promising rate stability through 2024.
“This isn’t professional work,” said Valley Electric member Ken Johnson. “It’s obvious these guys have to go.”
CEO Evans was arrested Tuesday at 5:46 p.m. on charges of embezzlement. The Nye County Sheriff’s Office reported it had found records that showed Evans billed Valley Electric $75,000 to move power lines near her Pahrump home underground in April.
Evans posted a $5,000 bail later that night. A statement from the Nye County Sheriff’s Office said Evans told officers she paid for the work, but “if she did not, then she would fix it.”
Lieutenant David Boruchowitz said the Nye County Sheriff’s Office searched the Valley Electric offices a third time on Wednesday. He said it was for email records only, and was a “simple confirmation of administrative records.”
Evans first joined Valley Electric after former CEO Thomas Husted resigned abruptly in May “to pursue other interests.” Since then, the company announced a 9 percent rate hike.
Last week, the sheriff’s office alleged the hike may have stemmed from former CEO Tom Husted’s use of rate-payer money to pay for a sexual harassment cover-up. The cooperative’s board denied financial cover-up allegations Monday but did not comment on the sexual harassment allegations.
Its board includes Ken Derschan, Richard Johnson, Peter Gazsy, John Maurer, David Hall, and David Dawson.
Lack of trust
An opposition group called VEA Members for Change formed in the beginning of February, before any allegations of financial mishandlings or sexual harassment were made public.
The group was formed to protest the rate hike — which was announced Feb. 7 — and remove the board members.
Despite the $200 million sale of a transmission line in September 2017, rates were set to go from about $0.11 per kilowatt hour to $0.12 on March 1. This would be the first permanent electric rate increase in more than 10 years for members.
“We voted no on the sale because we were afraid of this happening,” said Valley Electric member TJ Moore. “We were afraid money would be mismanaged and rates would go up.”
More than two-thirds of its voting members — about 11,750 people — voted “yes” in November 2016, allowing the measure to pass.
Ken Johnson, one of the organizers behind the VEA Members for Change, said members spend about $250 each month on electricity and $55 for internet. He expects to pay $280 for electricity and $75 for broadband after the rate hike.
In addition to promising rate stability through 2024, Valley Electric also promised to roll back a rate increase enacted in 2016, a $579 cash premium for each member-owner, to set aside $7.2 million for the retirement of capital credits, and a $5 million investment for a community recreation center near its headquarters.
“They failed on promises,” said Moore, a volunteer for VEA Members for Change. “I don’t trust the current board.”
Mike Hengel, Valley Electric’s executive vice president of corporate communications, said Valley Electric had no comment on the VEA Members for Change petition. Hengel is a former editor in chief of the Las Vegas Review-Journal.
Ken Johnson, the cooperative’s former executive vice president for broadband business, said recent allegations and Evans’ arrest were a shock to the community, despite suspicious activity surrounding Husted’s departure.
“For him just to walk away, no plaque or anything, you knew something was wrong,” he said. “There was no goodbye. The board didn’t fill anyone in. We trusted that over time, something would come out.”
Recent action from the board hasn’t restored members’ faith in the cooperative’s leadership, Johnson said.
On Tuesday, Valley Electric released a statement saying Evans was placed on administrative leave immediately after her arrest, and Chief Financial Officer Steve Morrison was named acting chief executive by VEA board Chairman Derschan. According to the sheriff’s office, the staff in human resources and finance are still under investigation.
“(Morrison’s department is) under investigation,” Johnson said. “What were they thinking?”
A statement from Valley Electric on Wednesday said the cooperative plans to cooperate fully and transparently with authorities.
“VEA regrets the current circumstances, and we have initiated our own internal investigation. We remain committed to our members,” the statement said. “Services will not be affected.”
Ken Johnson said VEA Members for Change has collected about 400 signatures on a petition to oust the current board. The 50-plus members in the group need 2,000 signatures, according to procedures stated in the cooperative’s bylaws, he said.
The group expects to hit deadline in about a week.
“The petition is the only action we have at our disposal to correct this issue,” Ken Johnson said.
Residents in Valley Electric’s service territory don’t have other utility options, unless they rely purely on solar power.
The recent arrest and allegations have only added to the group’s intensity, he said. Their Facebook page shows volunteers are planning to collect signatures Thursday, Friday and Saturday.
“Community members are sounding off,” he said. The board needs to “step down for the good of the community. … They’re not up to the task of holding the CEOs in check.”
The next VEA meeting will be March 7. Moore said she expects “the whole town will be there, especially after (Evans’ arrest.)”
According to Ken Johnson, Pahrump community members are fed up.
“People want answers. They want to know what the heck is going on,” he said. “There’s no trust in the community at all.”
How cooperatives work
According to statements from the Valley Electric Association, the cooperative is “a member-owned nonprofit electric utility headquartered in Pahrump.” It provides electric service to more than 45,000 people in a 6,800-square-mile service area primarily along the California-Nevada border.
Stephen Bell, the director of media and public relations for the National Rural Electric Cooperative Association, a trade association, said electric cooperatives have two missions: providing reliable, affordable electricity and empowering the communities they serve.
“Every electric cooperative adopts its own bylaws and policies, consistent with the laws of its state, as well as federal tax and other law,” Bell said in email. “Because electric cooperatives are led by, and belong to, the members they serve, each co-op approaches governance according to its unique characteristics and legal requirements.”