The Coop and the Cult of Magical Thinking

Luis, Luisa y Los Hitos

As many of my readers know, the New Mexico Public Regulation Commission (PRC) has scheduled a meeting on Jan. 6th to hear whether or not the PRC should hold official hearings on the Kit Carson Electric Cooperative, Inc.’s (Coop) request for a rate increase. At least 82 members protested the rate increase.

According to The Taos News, CEO Luis Reyes disputed and otherwise threw out 90% of the protest for ambiguous reasons. Back in 2010 El Reyes threw out 99.98% of the protests but the PRC held a hearing anyway. Luis likes to make things up.

The 2010 hearing ended abruptly but was never completed. Apparently, the PRC bowed to the wishes of the USDA/RUS who insisted on encumbering the Coop’s assets due to the federal grant and loan of 60 million dollars, so the PRC bowed to the feds and quit. The Broadband project remains incomplete and several years behind schedule.

Back in 2010 the PRC and the Coop kicked the can down the road and now, like a dark figure in a horror movie, “Freddie’s” back.

CEO Luis Reyes (Papa) and Trustee Luisa Valerio Mylet (Mama) are leading Los Hitos down the road into another hearing so that the “Traveling Trustees” can continue getting paid and entertained. The Trustees worry today whether the hearings might interfere with the annual February jaunt to New Orleans. Mama Mylet used to wring her hands and say about all the side ventures, “How are we going to pay for all this?” Now she knows: let the members pay.

According to the Coop’s rate filing and their own documents, the Coop is performing “significantly below the median levels for other utilities in the U.S.” Further “KCEC’s equity as a percentage of total assets (equity percentage) was only 27.79 percent…” compared “to a median of 43.92 percent for all U.S. electric cooperatives…”

Now for the kicker: The report says, “Costs related to the non-utility services have not been included in electric utility cost of service.” This summary of underperformance equates to “mismanagement” according to the Coop’s own consultant and a normal person’s interpretation of the English language.

So despite all the revenue from the electricity sales that has been invested in outside ventures, including the Call Center (paid for with KCEC reserves) Propane (10 years plus of losses carried), Internet (annual losses of 6 figures), Command Center (estimated losses at $300,000 per year for 40 years), and Broadband (loans estimated at $25 million for 40 years), the Coop insists the PRC ignore principal, interest, staff and overhead expenses associated with Broadband, etc. mentioned above. According to the Coop’s application for a rate increase and Friction experts, the Coop allegedly replaced serviceable electric utility poles with newer poles to serve Broadband at the Coop’s electric-side expense.

Meanwhile the Coop wants to borrow another $7 million to finish the Broadband project and another $38 million to buy their way out of the Tri-State contract and, by their own admission, owe members “37 million” in “capital credits.” I’m afraid to add all that up.

According to charges filed in District Court regarding the notorious and mostly unprosecuted characters in the Coop robbery, the suspects involved were part of a Ranchos de Taos [drug] Gang. Why didn’t KCEC’s HR department vet the “so-called” local gang-bangers? Everybody in Taos knows who’s who.

Indeed, the Coop can’t even manage its own cash controls and kept a couple hundred thousands of dollars in cash and checks on hand. And why didn’t the Coop make daily deposits, as is standard operating procedure with cash businesses? Incompetence or conspiracy?

For years politicians in New Mexico have pleaded for leniency under the “Fran Gallegos” rule: “I’m not a crook, I’m incompetent.” Now, however, despite the rationale that the devil (or gambling) made me do it, the judge this time sent former Sec. of State Diana Duran to jail.

While Taos Friction doesn’t question the Traveling Trustees’ intentions or CEO Luis Reyes’ compulsive and restless imagination, we members question the “mismanagement” and “incompetence” at the KCEC. The membership can’t afford either crooks or incompetents.

Trustee Virgil Martinez, the only trustee who voted against the request for rate increases, says, “We (trustees) should all be in jail.” Since it’s the Christmas season, Taos Friction believes the “yo ho eleven” trustees plus the CEO should resign and give the membership a new beginning in 2016.

It’s the right thing to do.