Cobb EMC loses $2.8 million in third quarter
by Kim Isaza
newseditor@mdjonline.com
March 24, 2012 12:00 AM | 4585 views | 20 20 comments | 7 7 recommendations | email to a friend | print
MARIETTA — A $4.3 million write-off related to Power4Georgians and a demand from Uncle Sam for $1.7 million in back taxes helped push Cobb EMC’s expenses higher than revenue in the third quarter, which ended Jan. 31.

The Marietta-based electric membership cooperative reported a loss of $2,832,561 on revenues of $115,982,756 and expenses of $118,815,317 for the quarter.

Year-to-date, the company reports a total profit of $13,509,729. In all of fiscal year 2011, the company saw almost $22 million in profits, but executives anticipate less this year.

As for the third-quarter revenue, income from natural gas marketer Gas South, a wholly owned subsidiary of the cooperative, accounted for 45 percent of the $115.9 million in revenue and 34 percent of the quarter’s expenses.

“Gas South had a good quarter in spite of very mild winter temperatures,” said Robert Steele, the company’s chief financial officer.

The corporation also wrote off half of its non-land investment in the Power4Georgians consortium, which aims to build the coal-fired Plant Washington. On Jan. 24, the Cobb EMC directors voted 7-2 to stop funding P4G. The company has already spent $13.5 million with P4G, and wrote off $4,306,045 of that this quarter.

Cobb EMC also paid the IRS $1.5 million for additional tax and $220,060 in interest for tax year 2008 this quarter. The IRS audited the corporation’s 2008 and 2009 consolidated tax returns and settled the audits on Dec. 9. No additional taxes were owed for 2009.

For tax year 2012, the corporation will begin filing separate tax returns for Cobb EMC and Gas South. The change is expected to allow Cobb EMC to meet the 85/15 test — meaning 85 percent of EMC’s revenue must be member-generated — to regain its exemption from federal and state income taxes. Still, Steele said it won’t affect the company’s bottom line.

“There will be virtually no dollar savings for Cobb EMC returning to tax-exempt status,” Steele said. “The taxes owed were related to Gas South activity.”

As for the company’s overall bottom line when fiscal 2012 ends on April 30, Steele predicted it will be $4 million to $5 million lower than the nearly $22 million made in FY 2011 because of warm temperatures throughout much of the year.

Cobb EMC has more than 170,000 meters and serves residential and commercial customers in Cobb, Paulding, Bartow and Cherokee counties in metro Atlanta and Randolph, Quitman, Calhoun and Clay counties in south Georgia.
Comments
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StopCalling!!!
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March 27, 2012
With this fiscal mess going on at at Cobb I want the CEOA to stop constantly emailing me and telling me to vote for Chip Nelson's board candidates. They didn't email for the fisrt round of elections. Why the current barage now?!?!?!
just a suggestion
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March 28, 2012
You need to post your email address so that CEOA can remove it from their database.
COBBCSI
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March 26, 2012
Is Dwight Brown going to take credit for this as well plus he still wants to be paid? Is Sam Olens going to come to the aid of Cobb EMC members and Georgia citizens’ that have been embezzled by Dwight Brown? These might be good questions to ask Sam at the next so-called Republican breakfast he is suppose to speak at also where he is on SB 469 remember neighborhoods fist slogan!!

SB 469 is anit first admentemnt bill.
Mike Powder Springs
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March 25, 2012
People, the IRS review is common in business. You follow the tax code as you interpret and leave it to the IRS to prove you wrong. That is prudent decision making. Nothing malicious, no fabrication, no Enron type synthetic accounting.

Pay cut for employees is absurd. I want my linemen and service teams to be rewarded for their skill and knowledge for handling power systems safely.
anonymous
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March 25, 2012
Same old crap, different day. EMC employees will defend management no matter what they do and those idiots can't even file their taxes correctly! They must think the IRS is as gullible as EMC Members have been in the past.
EMC 25 yr customer
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March 24, 2012
Could be worse you could be a Ga Power Customer, Elect new board members, and be involved in what is going on @ EMC
Skeptical Mem
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March 24, 2012
Concerning the 2008 IRS audit- this column says Cobb EMC in 2012 will start filing separate returns for Cobb EMC and Gas South in order to allow COBB EMC to meet the 85/15 split because 85% of Cobb EMC's revenue must be MEMBER generated in order to take advantage of the exemption of federal and state income tax. I do NOT understand why this was not done in the beginning considering, Gas South is a totally "For Profit" business. I don't know if EMC's corporate tax returns are internally prepared or externally, but anyway, the preparer should have known the possible problem and seen it before the return was ever submitted.

Did Dwight Brown tell them how to prepare the returns? I hope the 2010 and 2011 returns do not have the same mistake.

Will the Dwight Brown/Previous EMC Board Sheep show ever end?!
Harry A
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March 24, 2012
This type of thing is to be expected.

Dwight's civil lawsuit for the $1.8 million starts April 3rd in Judge Schusters courtroom. The man has no shame or ethics.

East Cobber
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March 24, 2012
As a shareholder, the P4G write off does not bother me as much as the IRS audit finding. Who is our accountant and have we fired them (along with mgmt) yet ???
Cobb Taxpayer
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March 24, 2012
Where is the transparency and forensic audit of the Cobb Owners group and Take Back Cobb - this election is flawed, tainted with attempts to steal - Dwight must be back ? Stop corruption, my foot, identify the corruption - District Attorney Pat Head has a phone and email - call him !
Devil Workers
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March 24, 2012
Has it never occurred to anyone why not one employee ever went to Pat Head? The administrative staff knew of the dealings, had privilege to emails and documents, and sold their souls for a paycheck.

If it had been me, I would have went to work every day wearing a wire and made many visits to the DA and the GBI.

They have a whistleblower protection act, so fear of losing their job is not the answer. They made it easy for the management and board to steal. What was/is the payoff for those employees?
EMC Member
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March 26, 2012
@Devil Workers: You ask what the payoff for the employees was? Many of them were stock holders in Cobb Energy and got a large payout as part of the lawsuit settlement. That is why so many of them signed the full page ad last year supporting Dwight Brown after he was indicted.
Georgie Boy
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March 24, 2012
I am sure the election next Saturday will provide us with a Board that will address these financial matters as well as governance.

http://kingemc.com/Home_Page.html

Pat H
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March 24, 2012
We should not be considering Power4Georgians a loss, we should be recouping the money from Dwight Brown, Dean Alford and the rest of the crooks/cronies involved in this criminal scheme.

Any thought of capital credits will be dissipated and our rates will be rising.

A pay cut for all employees of at least 15% and 25% for the executives and management should be the first consideration. Owners/rate payers should not be the first to pony up.
Member/Employee
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March 24, 2012
Pat, are you going to pay my mortgage when they cut my pay by 15%. I realize I'm one of those members that you don't believe should have any rights, but I get up every morning, go to work and do my job to make sure when you get up, the lights come on. How dare you suggest they cut my pay! Despite what some of you seem to think, the hourly employees had no idea what Dwight and the board were doing. We simply went to work every day and did our jobs to the best of our ability, just as we do today despite the harsh criticism we have faced in the press. Perhaps you should walk a mile in our shoes before you start spewing your distaste of the average employee.
In Disbelief
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March 24, 2012
A pay cut of at least 15% for all employees? How can you possibly suggest something that will force many into searching for a second (third?) job?

I don't know about everyone, but for some employees I do know that the last time they saw pay at the cut you are suggesting was anywhere from 3-5 years ago. Have you seen the nosedive the economy has taken in that time?

Go after Dwight Brown - I don't care. But don't go headhunting the employees. They have enough problems without people like you suggesting they take a heavy hit for something they had nothing to do with.

I don't know what executives and management make, but 25% is a hefty percentage as well. Without knowing their pay and their lives, I couldn't possibly know how badly that would hurt.

As for the employees - in better economic times 15% would either be doable or cause for seeking new employment. Or both.

Now...only someone entirely out of touch with the current economy would suggest employees take AT LEAST 15% pay cuts to make up for a loss that doesn't involve their job performance. Especially when some of them are also the members you think should not be the first to "pony up".

Out of touch with the economy, or too busy attacking Cobb EMC for the sake of attacking Cobb EMC. Not sure which.
EqualOpportunity?
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March 24, 2012
Pat I am not so sure that cutting salary would be the right approach. I spoke with Eric Broadwell and he feels that there may other ways to lower rates and keep or increase pay for employees that aren't in management. He was also right when he said there was a tax hit to the EMC. I like his ideas and the slate he was supporting way before any group was offering a slate.

http://www.broadwellforcobbemc.com
Paid Up
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March 24, 2012
This is the reason we need to elect people with strong business management experience -- a board of business novices will only compound matters and take forever to get up to speed. We don't need political cronies and greenies co-oping our organization only to advance their agenda. Experience trumps agenda every time. We also need people with ethics, unlike Broadwell, who actually used EMC's logo for his personal benefit without asking permission. If he thinks the rules don't apply to him before the election -- imagine where this goes (or think back where it went under Dwight's leadership.
Another Employee/Mbr
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March 24, 2012
A lot of salaried employees didn't know what Dwight and the board where up to either. Like Member/Employee I get up everyday and do my job and agree with the comment "how dare you suggest they cut my pay!" How mean of you to direct your hatered for Dwight and the board to the rank and file (hourly and salary). A whole bunch of us employees just want to be allowed to do our jobs!
anonymous
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March 25, 2012
The EMC employees sound like WWII German soldiers at the concentration camps - "I was just following orders." Come on now you had to know something was going on! I was there 3 months and figured out things weren't right. Much happier now in a better job with a much better run and honest company. Much better to have the courage to get out then to keep my head down and go along with things. To bad most EMC employees have that just go along with it attitude.

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