IN THE MATTER OF KIT CARSON ELECTRIC COOPERATIVE, INC.’S CASE NO. 10 00379 UT ADVICE NOTICE NO. 57

(Editor’s Note: Kit Carson Electric Cooperative is seeking a modification of last year’s PRC order to create an independent financial entity for the $60 million Braodband project. Intervenors, protesters, and members seek an explanation of the PRC’s and USDA-RUS’s justification for loans in excess of $20 million that encumber KCEC electric side assets, which could or do threaten the coop’s solvency. Below, member Link Summers copies the Friction with his letter to the PRC. Currently (today) KCEC execs are meeting with PRC staff in exclusive meetings. Members are seeking a public hearing. More rate increases are expected in the new year as KCEC continues in technical default on its RUS loans.)

BEFORE THE NEW MEXICO PUBLIC REGULATION COMMISSION IN THE MATTER OF KIT CARSON ELECTRIC COOPERATIVE, INC.’S CASE NO. 10 00379 UT ADVICE NOTICE NO. 57.

KIT CARSON ELECTRIC COOPERATIVE, INC.

Applicant

Intervenor Link Summers’

RESPONSE TO KIT CARSON ELECTRIC-S COMPLIANCE REPORT REGARDING THE SEPARATION OF ITS BROADBAND BUSINESS FROM ITS ELECTRIC BUSINESS

In its final order to Kit Carson Electric Cooperative, Inc’s request for a rate increase, the Public .Regulation Commission, after hearing all the evidence presented by KCEC, PRC staff and qualified intervenors, in public hearings, following its procedures as set for the in the Statutes of the State of New Mexico and the regulations of the New Mexico Public Regulation Commission, ordered the management of Kit Carson Electric to create a separate legal entity for its broadband business from the legal entity under which its electric business operates. Intervenor Summers believes this was done in order to protect the assets of KCEC, including member reserves and retained earnings, which belong to the members, from unreasonable risk and potential loss as a result of the ill – advised decision by KCEC’s board of director’s and upper management to undertake and fund a new, overzealous venture to unprofitably offer broadband service to people and institutions in its service area.

KCEC did not file a motion for the PRC to reconsider its opinion nor did it exercise its right to appeal the decision in the time set forth by law. Apparently KCEC has failed to comply with the lawful order of the PRC. Intervenor Summers believes that KCEC chose not to use the appeal process available to it and now seeks to have the PRC significantly alter or even reverse its order, which Intervenor Summers believes cannot be legally accomplished without a new public hearing with full participation of interested parties to examine the credibility of the assertions currently being offered by KCEC in its defense of its failure to comply with a lawful order of the NMPRC.

Intervenor Summers believes that KCEC’s defense is only appropriate for a “show cause” hearing at this stage of the proceedings. Intervenor Summers believes that KCEC has no legal right to disobey the order of the NMPRC. Otherwise Intervenor Summers believes that KCEC’s only other legal alternative is to request a new hearing and request a stay from the order until such time as the hearing can be held.

Intervenor Summers believes that there is no credible evidence that KCEC has made a good faith effort to comply with the order. Intervenor Summers believes that KCEC is attempting to use, as an argument, the threat of a technical default of egregious RUS loan provisions such as “cross default” clauses, absolute prohibition of prepayment, over-collateralization of the RUS loan and other unconscionable provisions often found in ”sub prime” loans, which KCEC and its lawyers agreed to, to make its case. Intervenor Summers believes that such an argument will wither under examination in a public hearing.

The Electric Coop was also given a requirement to submit a cost reduction plan but were given a year to complete this work.　The NMPRC should make it clear to KCEC that it expects KCEC to obey its orders.

Intervenor Summers hereby respectfully requests that the NMPRC require KCEC to obey all its lawful orders as written.

Respectfully submitted this 24th day of July, 2012

Intervener

Link Summers
P.O. Box 1600
Taos, New Mexico 87571