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Alabama electric cooperative sued for not giving refunds to members

By Shaun Zinck | Apr 14, 2015

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An Alabama electric company is being sued for allegedly failing to refund excess revenues to members as instructed under state law.

John Hollis Neyman filed the lawsuit against the Cherokee Electric Cooperative (CEC) Wednesday claiming the company has failed “decade after decade” to give its members a refund of excessive revenue.

“Patronage Capital” or “Capital Credit” is governed under state law on how electric cooperatives should distribute excess revenue, the lawsuit said. Neyman, who is a member of the cooperative, claims state law is “grafted onto CEC's bylaws to the exclusion of any contradicting provisions.” The lawsuit says that if a provision in the bylaws violates Alabama state law, it would be void.

The state law defines what excess revenue means, and lists several areas where revenues should be spent for electric cooperatives. It also states excess revenue can be given to members in the form of “general rate reductions,” or as prorated patronage refunds based on the amount paid by each respective member during that fiscal year.

The lawsuit seeks class status for all CEC members and seeks to recover an unspecified amount of damages. Neyman is represented by Will J. Parks III of Scottsboro, Alabama; Oscar M. Price IV and Nicholas W. Armstrong of Price Armstrong LLC in Birmingham; and Luke Montgomery and J. Bradley Ponder of Montgomery and Ponder LL in Birmingham. The Circuit Court of Cherokee County, Alabama, case number is 4:15-cv-00586.

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Organizations in this Story

Cherokee Electric Cooperative Montgomery and Ponder LLC Price Armstrong LLC

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