RED LODGE -- Trustees of Beartooth Electric Co-op on Friday postponed decisions on a rate increase and a recall petition as they scramble to line up legal counsel.
During a meeting in Red Lodge, the board voted to take no action on a 20 percent rate increase imposed by its power supplier, Southern Montana Electric Generation and Transmission, until Beartooth hires permanent legal counsel.
The matter of a member-driven recall petition, which targeted trustees John Prinkki and Joe Kern, also will be postponed until that time. Board chair Roxie Melton did say that enough signatures had been verified to validate the petition.
For the first time, Beartooth's meeting was moved to a larger venue, allowing more than 20 customer-members to attend; the previous limit was five.
One of them was Bill Mitten of Absarokee, who urged board members to act professionally and civilly.
"What I'm seeing in the press and firsthand is not civil and is not how a board should be run," he said. "These are your friends and neighbors."
The board's move to hire legal counsel comes one week after three members of Southern voted to bar Beartooth's representative, Arleen Boyd, from sitting on the Southern board. Later that afternoon, the same three members voted to file for Chapter 11 bankruptcy and to implement a 20 percent rate increase on the five rural electric cooperatives and the city of Great Falls, all of which make up the membership of Southern.
Beartooth passed a resolution Friday stating that the co-op considers last week's votes at the Southern meeting "a nullity."
Attorney Joel Todd of Red Lodge, who is serving as temporary legal counsel for Beartooth, expects to present the board with a short list of attorneys by Tuesday or Wednesday. He also advised the co-op to retain an attorney specializing in bankruptcy.
Todd challenged Southern's refusal to seat Boyd last week, saying no criteria was given to justify the action and no bylaw allowed it.
"The moment the Class A member (Beartooth) submitted the appropriate paperwork to Southern, Arleen was the representative on Southern," he said.
"There are all kinds of issues about the legality of what happened on Oct. 21," he said.
Todd also offered a new take on last week's bankruptcy vote.
"It's not a remote possibility that Chapter 11 (reorganization) will be converted to Chapter 7 (liquidation)," he said. "It's not remote and it's not speculative."
As Boyd described last week's drama, she said the day prior to the Southern meeting she had been seated on the board of SME, an affiliate of Southern. At the time, she said, she was told that anything discussed in closed session could not be shared with Beartooth co-op members or even her fellow Beartooth trustees. When Southern considered her seating the following day, she confirmed that she would respect all legal requirements for confidentiality, but that minutes and bylaws should not fall under that category, she said.
Prinkki, who had served as Beartooth's representative on Southern's board until October, said he was not bound by the same restrictions on the sharing of information. It was understood, he said, that confidential and proprietary information was off-limits. Taking issue with last week's votes, he said Boyd should have been seated.
"If I had been on the board, I would not have voted the way they did," he said. "Their mistake in judgment was really inexcusable."
During Friday's meeting, the Beartooth board also refocused its due-diligence effort that was directed to an analysis of the Highwood Generating Station and the financial health of Southern.
Now, the due-diligence effort will be directed to gathering information on alternative sources of power and the financial implications of those alternatives.
"It will identify what we need to know, what we don't know, the alternatives and comparative prices," Boyd said.
In one of its final moves, the board removed the censure that had been imposed on Boyd during Beartooth's July meeting. Though opinions vary on what motivated the censure, trustee Joe Kern explained that he supported censuring Boyd when she suggested that Beartooth consider other power sources and the potential for leaving Southern.
"Of course, Southern wasn't in bankruptcy at that time," Kern said, "and I couldn't see any point in pursuing something that was a breach of contract."
But at Friday's meeting, Kern inexplicably voted against rescinding the censure. Prinkki abstained.