KINGSTREE, SC -- Santee Electric Cooperative, Inc. today released an independent report on the cooperative's management and board practices.

Smith and Christensen, a Charlotte law firm specializing in cooperative governance, spent several weeks preparing the review after the cooperative's board of trustees hired the firm to conduct a comprehensive internal audit of Santee Electric's management and board practices. The board's action came in response to questions raised by a group of Santee members who sued the cooperative concerning corporate governance.

As part of their investigation, the law firm was encouraged to communicate with the member-plaintiffs in the lawsuit and to solicit input from the general public. The cooperative placed no limitations on the firm's access or investigative authority. To ensure objectivity, the firm retained the right to withdraw from the work if they did not receive complete cooperation.

The investigators' report criticized the cooperative's actions in some areas while commending it in others.

The investigators suggested that Santee Electric alter its board election bylaws and procedures to make it easier for candidates to appear on the ballot. They also recommended that the cooperative take steps to make it easier for members to exercise their right to vote. The investigators further suggested that the cooperative's membership should reduce and clarify board compensation and benefits. In terms of general governance, they recommended greater transparency and member access to the board. Finally, they recommended less micro-management by the board.

The report validates other Santee practices while refuting recent allegations. The investigators found no basis for allegations that the cooperative has been charging inflated rates. According to their analysis of the cooperative's data, Santee's rates are justifiable and within the appropriate range. They also investigated claims that the cooperative spent lavishly on facilities, but ultimately reached the opposite conclusion by approving the cooperative's analytical approach to architectural, engineering and construction planning. Regarding capital credits, the investigators recommended a more formal board policy but found no fault with Santee's history of capital credit retirements. Finally, they uncovered no evidence to support allegations that Santee's management is overcompensated or guilty of misconduct.

Santee's leadership reacted favorably and has begun to work on a plan to address issues raised by the report. 'We appreciate the hard work that went into this process,' said Billy L. Morris, Jr., chairman of the cooperative's board of trustees. 'We look forward to the opportunity to sit down with the plaintiffs in this lawsuit to discuss the report's recommendations.'

Floyd Keels, the cooperative's president and chief executive officer, acknowledged that parts of the report are not favorable. 'The facts are what they are. Our next step is to explore the report's recommendations for ways to improve the cooperative's operations and responsiveness to the membership.'

Santee has yet to file a formal answer in the lawsuit, and Morris expressed hope that the parties could quickly meet to discuss an amicable resolution. 'We've made the audit findings very public, and now we just need to get together and talk about what is best for the cooperative.'

Keels echoed his chairman's sentiment. 'We are ready to meet with the plaintiffs to address their concerns. In the meantime, we will begin working on our own reformation plan based on the independent report,' Keels said.

'If everyone is reasonable and dedicated to the best interests of Santee Electric, we will have a positive outcome,' Morris said. 'I'm confident of it.'