According to Wikipedia, a utility cooperative has the following characteristics:
A utility cooperative is a type of cooperative that is tasked with the delivery of a public utility such as electricity, water or telecommunications to its members. Profits are either reinvested for infrastructure or distributed to members in the form of "patronage" or "capital credits", which are essentially dividends paid on a member's investment into the cooperative.. Each customer is a member and owner of the business with an equal say as every other member of the cooperative, unlike investor-owned utilities where the amount of say is governed by the number of shares held.
Will a utility cooperative be governed by the non-profit corporation statute? Denton County Electric Cooperative, Inc. d/b/a CoServ Electric v. Nicole Hackett, 36 S.W .3d 765 (2012) sought to answer this question.
In that case, the Court addressed whether electric cooperatives must adhere to the Texas nonprofit corporation’s code. The facts were straightforward. A class-action lawsuit was filed against Denton Electric Cooperatives, Inc. (“Defendant”) alleging that Defendant failed to provide open meetings; open records; and fair voting for board elections. The trial court certified the class to proceed with the lawsuit based upon Texas’s non-profit corporation’s code. Defendant argued that the class certification was improper because that code did not apply to electric cooperatives.
The Texas Electric Cooperative Corporation Act (“ECCA”) applies to electric cooperatives. Plaintiff argued that since the ECCA does not state whether it governs all aspects of running a member cooperative, the nonprofit corporation statute would govern. On appeal, the Court explained two reasons why that statute did not apply to electric cooperatives:
(1) cooperatives were not similar enough to corporations, and
(2) the fact that the legislature deliberately chose to incorporate only two specific provisions of the non-profit corporation’s code implied that the legislature did not intend for that code to apply to electric cooperatives.
Therefore, the Court of Appeals ruled that class certification was improper because the Texas non-profit corporation code did not apply to cooperatives.