Taos KCEC Trustee Adang: Defends Coop and Attacks Protesters
Coop joke: If asked to change a light bulb, Trustees say, “Let Luis do it.”
(Editor’s Note: Trustees Going to New Orleans. Hall of Shame pictured: see other post on Taos Friction.)
Trustee Peter Adang, who five years ago stood with members and protested KCEC rate increases and the financial co-mingling of electric coop and diversified enterprises got elected to the Board of Trustees on the reform ticket. But Peter turned out to be a “bait and switch” candidate. Apparently he couldn’t resist the Coop mantra: King Luis knows best.
Here’s an excerpt from Adang’s blog, posted on Jan. 26, 2016: “At the January 2016, board meeting the trustees had the unaudited financial reports for all of 2015. Total revenue was approximately $1 million below 2014. Operation and maintenance expense was also below 2014 and under budget for the year demonstrating that there has been an effort during 2015 to hold down costs. Nevertheless, the unaudited loss for 2015 is roughly $800,000 versus a $600,000 net margin in 2014. This $1.4 million swing in margin is almost exactly the amount of the revenue lost as a result of the closure of the Chevron mine.”
So what was the Trustee reaction, in addition to asking the NMPRC for a rate increase? They promptly scheduled a trip to New Orleans, which will cost the increasingly insolvent Coop an estimated “$20,000.” Go figure.
After posting his tale of woe below, Adang attacks activists with whom he used to stand, blaming various individuals and members, the victims of the rate increase for the miserable mismanagement of the Coop. The Trustees and the Executives made the decisions to borrow and spend on diversity and screw up the Coop, travel and flip the bird to members, not the protesters.
Pobrecito Pedro complains that the protesters will cost the Coop $400,000 in attorney fees? But the Trustees, like CEO Reyes, have served for decades and taken classes in utility programs. The PRC has a fulltime legal staff. Why does Reyes hire attorneys to do the work his staff and trustees should do? Are they too lazy? Certainly, the rabble and the “cockroaches” according to Adang can’t be all that smart compared to the Trustees. But then Adang, like the Trustees and CEO, deplores both the “democratic process” and “transparency.” Webster’s calls it hypocrisy.
Manuel Medina goes to New Orleans but not to meetings, according to Flavio.
Below, Adang’s post, like Reyes and the Trustees request for a rate increase, avoids the issue of diversification, indebtedness, incompetence and mismanagement that have plagued the Coop for years. Wishful thinking and stonewalling requests for financial information does not justify Coop decisions. On the other hand we hear Peter has sold his house and is moving to Albuquerque for personal reasons. He got what we call “the Taos Lesson.”
Never missed a trip in 30 years?
Adang’s message, in the post below should be called: “Kill the messenger.”
TO: MEMBERS OF KIT CARSON ELECTRIC COOPERATIVE FROM: PETER J. ADANG, TRUSTEE RE: JANUARY 2016 BOARD MEETING DATE: JANUARY 26, 2016
1. At the January 2016, board meeting the trustees had the unaudited financial reports for all of 2015. Total revenue was approximately $1 million below 2014. Operation and maintenance expense was also below 2014 and under budget for the year demonstrating that there has been an effort during 2015 to hold down costs. Nevertheless, the unaudited loss for 2015 is roughly $800,000 versus a $600,000 net margin in 2014. This $1.4 million swing in margin is almost exactly the amount of the revenue lost as a result of the closure of the Chevron mine.
2. Net new services in 2015 totaled 175 indicating some growth in Kit Carson’s service area but not enough obviously to make up for lost revenues. The administration estimates that the Cooperative needs around 600 new connections each year to stabilize revenue.
3. Trustee expense for the year was $179,000, an increase of $30,000 over 2014 but still far less than the more than $300,000 incurred in 2010. Most of the 2015 increase is a result of the large number of meetings involving the proposed exit from Tri-State and finding a new wholesale electric supplier.
4. Delinquencies of members are in excess of $1.6 million which is the highest level since 2012 and perhaps the highest in the history of the Cooperative.
5. Interest on long-term debt increased $80,000 in 2015 over 2014. This is the result of the Cooperative borrowing from an RUS line of credit to fund needed capital improvements.
6. It was reported that 66% of the Cooperative’s residential consumers are below the average 480 Kwh per month usage level indicating that the trend toward lower Kwh usage is continuing.
7. In 2015, the Cooperative sold 16 million fewer Kwh than in 2014.
8. The Cooperative still does not know what Chevron’s future load requirements will be although one of the protestors (who fancies himself a utility expert) has suggested, without knowing what he is talking about, that it will make up for the mine closure. As previously reported, Chevron has two ongoing EPA obligations at the mine site: (1) waste water treatment from the flooding of the mine; and, (2) contamination clean-up. Chevron has thus far declined to disclose what its electricity requirements will be for these projects. All that is known at this point is that both projects must be underway by October 2016.
9. The Cooperative’s Tri-State representative reported that, through November 2015, Tri-State had a net margin of $57 million. Posted Yesterday by
TO: MEMBERS OF KIT CARSON ELECTRIC COOPERATIVE FROM: PETER J. ADANG, TRUSTEE RE: DEVELOPMENTS DATE: JANUARY 23, 2016
1. The main issue for Kit Carson these days is the proposed rate increase. As reported previously, the PRC will review an REC rate increase advice notice if there are 25 protests filed. The PRC has a form for a protest. One might think that it would be a simple matter to collect protests, count them and determine whether there are enough. However, the PRC itself has injected ambiguity into the process by promulgating a rule that the protest form must only be in “substantial compliance” with the protest rule rather than in strict compliance. Some lawyers claim that this PRC regulation violates the statute governing protests which, they assert, requires strict compliance with the protest rule. All of this has resulted in confusion as to whether there are sufficient protests to meet the statutory requirement.
2. Kit Carson’s proposed rate increase is a case in point. Kit Carson reported to the PRC that it had received 112 protest forms. The PRC staff reported to the PRC that 102 protests were filed. Then, at a hearing on Wednesday of this week, the PRC’s attorney reported to the Commission that the PRC staff had concluded that 63 of the protests were in substantial compliance with the required form; that he had concluded that only 33 were in substantial compliance; and, that Kit Carson had taken the position that only 7 were in strict compliance. However, he failed to identify to the Commission or to the parties involved which protests were being claimed valid and which were not. This resulted in a hearing that took several hours interrupted by a lunch break in which some commissioners were obviously lobbied by other commissioners to change previously announced positions and ended up with the PRC voting 3 to 1 to send the matter to a hearing examiner. Since no written order has been filed as of this writing, we do not know what the scope of the hearing will be. It could involve an inquiry into (a) whether there are, in fact, 25 valid protests and/or (b) whether there is just cause for a rate review and/or (c) whether there should simply be a rate review. In the meantime, Kit Carson’s rate increase is suspended for nine (9) months.
3. Assuming, for the sake of discussion, that the PRC’s chief counsel’s conclusion that there were 33 valid protests is correct, it is indeed sad that 33 persons out of Kit Carson’s 22,500 members can hold the entire cooperative hostage to their personal animosities. It is widely known that, of these 33, one has maintained a grudge against the cooperative for years because a job application was rejected, another because a close relative was fired, another a frustrated “wanna-be” lawyer and gadfly who doesn’t even live in Taos, and another a gossip-mongering rabble-rouser who fancies himself a journalist but traffics in rumor, innuendo and speculation. In the meantime, unless interim rate relief is granted by the PRC, the Cooperative will lose money every month, jeopardizing its standing with the RUS and other creditors, and possibly impairing its ability to provide reliable service.
4. In addition, the Cooperative is at a delicate stage of negotiations to exit the Tri-State cooperative, and it now becomes questionable whether any other wholesale electric supplier will be willing to enter into a power purchase agreement with a financially distressed customer embroiled in a rate case. Thus, the 33 protestors have jeopardized a plan that could have saved Kit Carson members as much as $3 million per year in wholesale electric costs, leaving it tied to Tri-State for at least another 25 years (and possibly up to 60 years as indicated below).
5. When Kit Carson was embroiled in a rate case starting in 2010, it cost the Cooperative $400,000 to litigate it to a conclusion. Another full-blown rate case this time around will cost that much, if not more, thereby putting the Cooperative into an even deeper financial hole and making a future rate increase even more certain. The irony is that the PRC will have to grant Kit Carson a rate increase. Its mission is to make certain that RECs are financially viable. At this point, without a rate increase, Kit Carson is not. So there will be a rate increase. The only questions are the amount, and the form the increase will take.
6. On the Tri-State front (see Par. 4, above), Basin Electric, a larger cooperative of which Tri-State is a member wants all of its members to commit to contracts extending out to 2075 which means that Tri-State will try to force its member cooperatives to agree to extend their contracts to 2075 as well. This would mean, if Kit Carson cannot get out of Tri-State, that it will be pressured to extend its contract with Tri-State from 2040 to 2075. The end result could be that Kit Carson members will be compelled to tolerate an untold number of Tri-State rate increases for a period beyond most of their lives. Tri-State has already announced that, on the heels of its 2016 increase, there will be another in 2018. An additional unexpected cost to Kit Carson members as long as we are subject to Tri-State stems from the fact that Kit Carson receives its power from Tri-State over a 345 KV line from Ojo Caliente. That line crosses about 1 ½ miles of Taos Pueblo land and the Pueblo has just charged Tri-State $30 million for the easement. Guess who will pay that? Kit Carson members will get that cost added into their wholesale electric charges. Finally, if the foregoing were not enough pain from remaining with Tri-State, it has announced that it is considering adopting a “lost revenue” recovery fee to be imposed against members who exceed the 5% limit on wholesale power purchased from other sources. This will penalize cooperatives that purchase wholesale power from QFs or other renewable sources even if they are required to do so by state or federal law. The result of such a policy will be to stifle competition in the wholesale power market and discourage the move to renewable energy. We can all thank the 33 protestors who are putting the remaining 22,400 plus Kit Carson members in this position. Their attitude seems to be that, as long as they get their way, the larger adverse impact of their actions is irrelevant.
(Editor’s Note: Peter, on behalf of the Protesters and members, I want to thank you for this revealing portrait of Coop hypocrisy that confirms the unethical behavior of the traveling trustees. Bon Voyage. We wish you health and wisdom in your new home.)