Kit Carson Coop forced to Confess BY PRC

“The Trustees and CEO remind me of the Wisconsin legislature–out of touch and pilfering the pocketbooks of the poor people.”–Flavio

PRC Order

On Thursday, March 10, the Public Regulation Commission (PRC) issued guidelines, concerning the Kit Carson Electric Cooperative’s (KCEC) request for a hearing regarding rate increases. The PRC order advises the hearing examiner to address the following issues brought by KCEC and/or by 300 customers who have protested:

1. Whether the cost of service is accurately stated;

2. Whether the cost of service reflects prudently incurred operating and administrative expenses;

3. Whether the proposed revenue requirements are reasonable in relation to cost of service;

4. Whether the costs of service reflects any cross-subsidization from the electric utility to other services;

5. Whether the cost of service is properly allocated to the residential class; and

6. Whether the proposed rate design for the residential class is just and reasonable, including the allocation of costs between fixed charges and kilowatt-hour charges, and whether Kit Carson should offer inclining block rates.

Victory for Members

The PRC order and decision regarding hearings is considered a tentative victory by rate protestors, who want an analysis of KCEC’s costs regarding “operating and administrative expenses” and “cross-subsidization from the electric utility to other services.” Protestors plan to query the Coop about estimated losses in Propane ($7 million), Internet ($2 million) and the Command Center ($3 million). So far, the KCEC has not presented the public with a plan for liquidating and/or correcting decade-long operating losses from side ventures—other than making minor adjustments to the balance sheet.

The KCEC created a five-member Propane Board of Trustees, who get paid $150 per meeting–and used fancy accounting to turn a liability into an asset. Now they call the KCEC’ Propane liability—a loan from RUS and the Coop itself–an “investment.” You know, George Bush turned prisoners of war or captured Afghanis—into “enemy combatants” in order to escape the Geneva Conventions that protect “prisoners of war” from torture. Now KCEC has bought the same pen George used.

The Coop has a history of losing money where they must compete with private industry: Internet and Propane. yet the trustees have pledged member assets toward the repayment of a $19 million matching loan for a federal Broadband grant of $40 million (a total of $60 million for the project). Taosenos consistently complain about KCEC’s poor Internet service, including some trustees, suggesting KCEC is in the wrong business.

CEO Reyes has estimated that protests have cost the KCEC 150,000 dollars so far in legal and advertising costs. Yet, the unpaid protestors say they are saving members $300,000 per month on electric bills while the PRC hearings drag on. They also say they are anxious to cross examine Reyes and the Trustees.

Trustees continue to travel and incur per diem expenses without posting expenses and/or instituting a policy of transparency aimed at controlling administrative costs—despite asking members for rate increases. In the midst of this controversy, we’re told Toby Martinez, Manuel Medina, and the peripatetic Reyes traveled to Florida in the last week.

Each new division at the Coop—Propane, Internet, Command Center, and, now Broadband—offers trustees a chance to attend another out-of-town conference.

The Naughty Nine

So far KCEC CEO Luis Reyes and the nine-members who voted for increases, including Bobby Ortega (Questa), Manuel Medina (Taos), Toby Martinez (Ranchos de Taos), Francis Cordova (El Prado), Chris Duran (Penasco), Ambrose Mascarenas (Llano San Juan), Art Rodarte (Ojo Caliente), Jerry Smith (Black Lake), Bruce Jassman (Angel Fire), are losing the public relations battle.

Not only have the CEO and Trustees misrepresented Coop losses to the public during the last few years, they continue to allow gerrymandered districts, contrary to the Trustee’s Oath of Office (1.1.111). According to the oath, Trustees swear to “protect and preserve the true principles of cooperation whereby each member has an equal vote and all members have equal rights to share in the Cooperative’s services.” But district representation varies from 800 members per trustee in the Penasco Valley to 3000 per trustee in Taos Valley.

Protestors say they will try to recall the “Naughty Nine” listed above. Only Trustees Virgil Martinez and Luisa Mylet, who voted against rate request increases are exempt. Now, we hear, both trustees are persona non grata at Coop HQ.

Ignoring the Facts ?

While the real estate market prospered in Taos during the last decade, the Coop’s cash flow from the electric side enabled Trustees to borrow and pay for high administrative costs and the costs of entrepreneurial adventurism: Propane, Internet, and the Command Center, which has no tenants to share costs. Meanwhile, Tri-State G& T raised the cost of electricity rates by about 60% since the Plains merger in 1999-2000. Frequently, at Coop meetings, trustees and CEO Reyes said during the last decade that they would re-think the Propane project if it didn’t earn a profit during its first five years.

Despite a downturn in the economy and reversal in the real estate market, the Coop has engaged in a $60 million Broadband adventure. Go figure. It sounds like another “borrow and spend” ponzi scheme, based on wishful thinking.

Here is an excerpt from a report, “Traveling Trustees Redux,” (May 15, 2008, Horse Fly). We selected the following snapshot as an indicator of trustee travel abuse.

“Of particular note are the expenses incurred by some [four] trustees for the NRECA’s (National Rural Electric Cooperative Association) [week-long] annual “Education & Training” meeting in Las Vegas, Nevada, held in March of 2007.

(Incomplete)

Trustee Art Rodarte of Ojo Caliente spent $6,123.78;
Ambrose Mascareñas, $5,061.88;
Chris Duran, $4,553.12;
Manuel Medina, $3,974.29;

Below trustee compensation for meetings and out of state travel is included in the total but listed separately in parentheses for members’ information. Horse Fly obtained the Kit Carson records from a reliable source.

(Incomplete)

Art Rodarte: $37,103.21 (Out of state total: $19,055.60)
Ambrose Mascarenas: $34,843.32 (Out of state total: $17,457.27)
Francis Cordova: $26,668.73 (Out of state total: $11,522.46)
Jerry Smith: $25,720.77 (Out of state total: $13,415.73)
Robert Ortega: $18,898.67 (Out of state total: $9,399.33)
Manuel Medina: $16,048.93 (Out of state total: $8,486.84)
Chris Duran: $15,517.07 (Out of state total: $6,540.73)

KCEC Trustee Arturo Rodarte District 3

 

Rounded off, the above-mentioned figures for all 11 trustees total an estimated $255,000.00 in individual compensation. In 2007, Mora-San Miguel Electric Coop members twice voted to reduce the number of trustees from 11 to 5 in order to curb what they considered excessive expenses charged by trustees.

Editor’s Note: We don’t have current figures for trustee expenses but urge KCEC to post the information on their transparent web site. We left out the names of retired board members and board members like Martinez and Mylet who voted against the rate increase.

 Further, it should be noted that Art Rodarte, representative to Tri-State, has earned for the last few years an additional  estimated $40,000 per year for that position from Tri-State plus whatever he earns at regular KCEC meetings and travel. Art is a special case. He serves as the swing vote on the board, thus he gets to name his price and position. The business faction that once “bad-mouthed” Art, flipped after Art flipped away from Ambrose Mascarenas’s political faction and voted to support President Bobby Ortega’s business-side bid for board control. 

Art’s an experienced Rio Arriba pol, who once beat the legendary Naranjo machine and won the race for state senator in an upset during the 70s. For this representative from Oliver’s Market in Ojo Caliente, working over the Taos boys is child’s play. You gotta love it.