NM PRC Hearing Examiner Sets Taos Coop Rate Date
The New Mexico Public Regulation Commission’s hearing examiner, Elizabeth Hurst, has set August 15, 2016 as the date to hear testimony pro and con for Kit Carson Electric Cooperative’s (Coop) application to raise the rates of residential members. The proposed “inverted block” structure would increase revenue for the Coop by some $3.4 million a year (by “penalizing” low energy users and conservationists).
According to the information contained in the hearing examiner’s order, “a residential customer who consumes 500 KWh per month would experience a rate increase from $70.82 to $84.24; an increase of 18.96%.” According to one of nine intervenors (member protesters), Chevron Mining, which is installing a mammoth water pumping system, would see a rate decrease of 11%.
While the hearing examiner’s order focuses on the residential rate increase, according to the PRC, the hearing examiner herself, and PRC staff, the order includes a clause designated by the PRC that focuses on whether the “cost of service allocated to the residential class is just and reasonable.”
Hurst, during the March 14 procedural hearing at the PERA building in Santa Fe, said to the Coop’s attorney, Chuck Garcia of Cuddy/McCarthy, that witnesses should be prepared to answer questions about shared and allocated expenses regarding the Coop’s other businesses (diversification: call center, command center, propane, Internet, Broadband).
The PRC staff’s first set of interrogatories sent to the Coop asks for financial information, minutes, materials regarding Board meetings, etc. In addition the staff asks for “detail and any other support KCEC has provided to these non-electric entities on an annual basis since their inception.”
Though nine local members of the Coop have intervened as pro se representatives so far, the Coop is already spending thousands of dollars on attorneys, who have filed and argued a series of losing motions.
First the Coop denied that twenty-five protestors would file protests to force a hearing. According to the hearing examiner, 88 protesters were accepted. According to the Hearing Examiner’s order, “Any interested person may appear at the time and place of hearing and make a written or oral comment” without becoming one of the nine intervenors. So interested members or one of the 88 protestors, who didn’t follow up as “intervenors are still in the game.
Second, the Coop tried to persuade the PRC to narrow the issues so as to avoid being held accountable for the vast debt and spending associated with outside businesses. They lost that one, according to the above PRC, hearing examiner, PRC Staff, confirmed by the order.
Third, the Coop wanted to rush the process and have the case heard by the end of June but the Hearing Examiner deferred to the more sensible notions of the pro bono intervenors in their David v. Goliath confrontation and she granted the extended period for discovery, filing interrogatories, motions, briefs, and burps, etc.
Now the Coop’s attorneys have filed a motion for a “protective order” to prevent the information “discovered” during the process of the rate hearing from becoming public. While the Coop may plead “proprietary interest” and fear of giving competitors an advantage, the competitors in Propane and Broadband, for instance, seem “anecdotally” to know more about the Coop’s business than the average member or trustee. The Coop model of business serves more as an example of futility than a paradigm of success. Even the electric business, a monopoly, is a mediocre operation, according to the Coop’s own “cost of service” study.
The Coop’s team of attorneys have been unleashed by CEO Reyes to spend the members’ money by issuing boiler plate or pro-forma cut and paste motions already prepared for this Coop some five years ago or in other electric utility rate cases. According to intervenor researchers, the attorneys basically tweak the dates and update the odd item but the motions remain basically the same.
Transparency?
In Schein v. Nora the New Mexico Supreme Court ruled that coop members should have limited access to Coop financial records but the Coop stonewalls requests from members. If the Coop were to cooperate with its own stockholder-members the case itself could be mediated instead of argued and hundreds of thousands of dollars saved. But CEO Luis Reyes and the Trustees, through their attorneys and according to scuttlebutt, are frightened by public exposure, due, allegedly to negligence and mismanagement.
(Editor’s Note: Terry Brunner of USDA/RUS, the government agent in charge of delivering the $60 million unfinished Broadband/fiber optic package said to this writer that KCEC might be the biggest and worst performing recipient of an American Recovery and Reinvestment Act of 2009).
Questions for Coopsters
Experienced intervenors say that interrogatories, depositions, testimony and cross examination will give the member intervenors an opportunity to ask questions not only about profits and losses or Trustee travel and meeting fees but also about other issues that affect costs and performance. Trustees traditionally hide behind the CEO’s long pants but this time, things may be different.
For instance, intervenors may ask Trustees about family members who work for the Coop and donations by the educational foundation to other family members.
What did the Trustee know and when about losses re: Propane, Broadband, Command Center, Call Center, and Internet?
How much did the Coop pay relatives and influential politicos for land leased to the Coop for Broadband storage?
A number of former propane buyers have asked Taos Friction why their deposits were tardily refunded with Coop checks from the electric side?
How much did the Coop electric side reimburse the Propane division for paintings in the boardroom taken in trade by the Coop from a poor but famous artist during a freezing winter?
Why did the Coop spend over $100,000 for a single annual meeting, according to Coop 990s in the middle part of the first decade?
Why did the Coop spend millions on new poles from electric side revenue to support Broadband installation when the Coop had been awarded a $60 million grant and loan for Broadband?
Why did the Trustees and CEO run off to New Orleans right after filing for a rate increase in Dec. of 2015 while pleading cash poor?
Why did Reyes claim 27 local, state and federal agencies supported the Command Center Coop concept but only the Town joined in officially and the county unofficially for a few months? Why did the Coop pay $400,000 for un-appraised land on which to build the Command Center? Why did the Coop accept $183,000 in the form of a legislative grant for architectural services? The grant went to the town but was given to the Coop in violation of the anti-donation clause. Then the Coop charged, according to the documents, another $400,000 to its $3 million RUS loan and grant for architectural fees? How much did the poorly conceived and inadequate facility actually cost?
Where did the money go?
Why did Reyes claim that 5500 businesses would sign up for Broadband? Five years later the Coop reports some 1400 individuals and businesses have signed on? But the project has, reportedly, run out of money and is incomplete.
Not only did a majority of trustees approve all of the above but also they gave Reyes a series of raises for doing such a good job of turning the Coop from the equivalent of being a solvent back at the turn of the century into an “insolvent” enterprise today?
Now, “they say,” the Coop is desperate to raise rates so it can borrow more money?
Why are Trustees running for re-election on a platform of negligent fiduciary stewardship and parading their failures in public, while refusing to cut back on travel, tighten budgets, or lay-off the feather bedding employees?
Does the Coop have a plan to liquidate the diversified losers?
Why does the Coop allow its equipment to interfere with local ham radio operations despite FCC prohibitions?
The list could go on for days and weeks, given the Virtual world of the Coop.
But come August, we members might learn something…