Member zaps electric co-op over improper tax

The electric bill arrives at Steve Wallach's house in Fort Worth. He looks at it, and something's not right. Tri-County Electric Cooperative is charging him 83 cents for an "SPD Crime Tax."

Wallach knows about the crime tax. He worked with Fort Worth police as a community volunteer and understands how the tax is funded and what it pays for. He knows for sure that his electricity co-op is not allowed to charge him for this under the guise of a Special Purpose District.

He calls Tri-County. The first person who answers the phone tells him that the co-op is authorized to collect the tax. Wallach argues but gets nowhere. Then a supervisor comes on the line and says the same thing.

Wallach calls the Texas comptroller's office, and a man on the other end of the line checks the records and tells Wallach that he's correct. Wallach hears that his complaint is being turned over to the enforcement division. Expect a call.

Meanwhile, A. Craig Knight, general manager and CEO of Tri-County, calls Wallach and tells him that his bill will get an 83-cent credit.

Wallach tells him it's worse than that. State law, he informs Knight, says that anyone unlawfully collecting a tax must give complete refunds to everyone.

There are potential penalties, too, such as large fines. Wallach says Knight gets so quiet that Wallach has to ask whether he is still on the line.

Pam Page, the head of enforcement for the comptroller's Fort Worth field office, hears the story from Wallach, then calls Phillip E. Colvin Sr., Tri-County's controller. She tells him that the co-op must stop collecting the tax and begin issuing refunds.

What Wallach has done -- at least to The Watchdog -- is nothing short of a miracle.

Holding an electric cooperative's feet to the fire, catching its leaders making a mistake and then forcing them to correct it is as rare as a summer electric bill under $100.

Co-ops, by their very design as member-owned entities run by boards of directors, are a closed shop. It's hard to learn anything about them. The state Public Utility Commission does not regulate them. They are not governed by state open-records or open-meetings laws, either.

I learned that the hard way in 2009 when I was evicted from Tri-County's membership meeting. No outsiders are allowed.

Knight, who earned $323,000 in 2009, according to the nonprofit's IRS Form 990, declined to speak with me. However, Colvin released a statement saying that the co-op was not to blame for the improper tax collection.

Sales tax auditors in the comptroller's office had sent an e-mail telling Tri-County to collect the tax, he wrote. An official with the comptroller's office apologized to the co-op for the wrong information, he said.

Tri-County is working on refunds for affected customers in Fort Worth and Keller, Colvin said in a brief phone interview. He declined to say how many. (Colleyville residents are required to pay the tax to their town, so Tri-County members there should expect the half-percent tax on their bills.)

R.J. DeSilva, a spokesman for the state comptroller's office, explained the error this way: "Our audit notes from several years ago showed there was an e-mail sent by an auditor in February 2010 saying the crime control district tax was to be collected. But a subsequent review a few months later removed that erroneous information. But the company had started collecting tax based on the first e-mail. That's why the company wasn't penalized. We simply told them to refund the tax inadvertently collected."

Tri-County has about 69,000 members in 16 North Texas counties. Members don't have a choice about where to get their electricity. Unlike most who live in deregulated areas, co-op members can't shop around. Most co-op members say they don't mind.

Wallach was praised by the co-op's controller, who wrote that Tri-County "would like to thank our knowledgeable consumer for helping overturn the state auditor's incorrect decision. ... This saved our members 0.5 percent on residential accounts."

Coming Sunday: The state makes it harder to learn of disciplinary actions against insurance companies and their agents.

Dave Lieber, 817-390-7043

Twitter: @davelieber