PRC Fines KCEC, Candidates for Coop Elections set

By: Bill Whaley
29 April, 2016

$2000 Fine by the Public Regulation Commission.

Mismanagement (Again)

In an order which granted “the application of Kit Carson Electric Cooperative, Inc. (“Kit Carson” or “KCEC”) to continue its fuel and purchased power cost adjustment clause (“FPPCAC”) as part of its approved tariff for electric service to its customers,” the PRC also fined the Coop for a missed deadline.

The order, dated, April 20, 2016, says: “A $2,000 fine is assessed against KCEC for failure to timely file its Application for continued used of its FPPCAC within 4 years pursuant to Rule 550.17.A.” The order also includes a paragraph, listing the Coop’s previous “missed deadlines.”

“The Commission finds that KCEC has been untimely in filing its FPPCAC continuation filings repeatedly and accordingly finds that KCEC should be sanctioned. In KCEC ‘s 2002 continuation filing, Case No. 3773, the Commission ordered a $2,000 fine for a late filing, (and suspended the fine pending the timely filing of KCEC’s next FPPCAC continuation filing and if that application was timely filed, then the $2,000.00 penalty was to be voided). See, Final Order, Case No. 3773 (November 9, 2004), adopting Recommended Decision of Hearing Examiner.

“In KCEC’s 2007 continuation filing, Case No. 07-00018-UT, by Commission Order dated February 13, 2007 (“2007 Order”), the Commission imposed a $500.00 fine on Kit Carson for a late filing. The $500 fine stemmed from the $2,000.00 fine that had been initially imposed on KCEC in Case No. 3773. The 2007 Order lifted the suspension of the $2,000 fine and imposed a $500.00 fine on Kit Carson for failing to timely file its 2006 FPPCAC continuation filing, and ordered continued suspension of the remaining $1,500.00 of the $2,000.00 fine subject to the condition that Kit Carson submit its next continuation application in a timely manner and in accordance with the Commission’s rules.

“In KCEC ‘s 2010 continuation filing, Case No. 10-00359-UT, KCEC did timely filing its FPPCAC continuation application, and, therefore, in the Final Order dated December 9, 2010, the Commission voided the remaining $1,500 suspended fine since Kit Carson had met the condition imposed by the Commission. However, KCEC is again untimely, because, as stated above, in the present continuation filing, KCEC is over 15 months late.”


According to the KCEC website, the following candidates are running for Board of Trustees in the May elections for District One: the greater Taos Valley area as well as Valle Escondido, Pot Creek, Ranchos de Taos, El Prado, and Llano Quemado.


Francisco Romero, a retired TMS art teacher; an alternative energy guru and apologist for Luis Reyes and Coop rate increases, Robert Bresnahan; a sometime school-board member, Jason Silva; incumbent Luisa Valerio Myles; and former county commissioner Andrew Chavez are vying for two positions.


Benefits include fees of $150 per meeting, $75 for committee meetings, and a travel allowance to some of the more exotic locales in North America.


Currently, the Coop has sought a controversial rate increase that raises residential electrical fees by some 20% while simultaneously lowering Chevron Mining fees by 11%. Though Chevron Mining has shut down its milling operations, the Mine is installing powerful electrical water pumps that run 24/7 365 days a year ad infinitum as part of its obligation to prevent more pollution at the Red River-Questa Superfund site. Critics say Chevron is getting a sweetheart deal, courtesy Tri-State Generation and Transmission and Kit Carson Electric Cooperative. So the members are paying higher rates at home to subsidize the Board President’s buddies at Chevron.


A hearing officer has been appointed by the PRC to listen to testimony and evidence from staff, KCEC, and nine interveners in August. Interveners claim KCEC has refused to make public financial statements, profit and loss statements, balance sheets, and cash flow reports that will allegedly reveal losses in the Coop’s diversified enterprises: the Call Center, Command Center, Propane, and Telecom/Internet/Broadband ventures. Interrogatories have been submitted by staff and will shortly be submitted by the Interveners.

In other words candidates for the Board of Trustees, if elected, will confront what appears to be a nearly “insolvent” Coop. According to their own reports, the financial condition of the Coop suffers from some $85 million in debt. But the reported balance sheet does not include the $20 million loan from USDA/RUS, the approximate $38 million in capital credits owed to members, or the projected buy-out of some $38 million by the Coop of its contract from Tri-State, its electricity provider. So far, KCEC has not named a substitute provider of electricity for the local Coop.


In total the $134 million Coop appears to be virtually, if not actually, upside down financially.


The Coop’s own “Cost of Service” study submitted to the PRC casts KCEC in a negative light, compared to other New Mexico Coops.


Industrial publications quote Luis Reyes as saying he has had as many as 10,000 residential and commercial customers signed up for fiber-optic services, Trustees estimate (off-the-record) that the Coop has somewhere between 1400 and 1800 customers. Apparently, Taos Net, Century Link, and Comcast have most of the customers for Internet services in Taos County. And the County is not growing except in the mind of Luis Reyes and his colleague at Town Hall, Rick Bellis. Taosenos are relocating due to higher and higher electricity rates, taxes, and the influx of second homers and retirees.


The RUS director of economic development, Terrie Brunner, told this writer and activist Jerome Lucero that KCEC was one of the worst performing grant ARRA awardees in the country. The Coop received a $60 million grant and loan for the fiber optic project, which has missed deadlines and remains incomplete. Trustees say the Coop needs another 6 to 10 million dollars in order to finish the project. Reports, according to analysis, say the Coop has spent revenue from electricity sales on improvements for the Broadband project.


The 5000 plus square foot Command Center has no tenants, except, like the equally large and vacant Call Center, a couple of KCEC dispatch employees and Broadband employees.


According to county residents, the Coop has delivered “drops” for fiber optic service to private property but will not come out and hook up members despite repeated phone calls.


The Coop has refused to say how much of the members’ money it has invested in side ventures and received assurances from the hearing officer that much of the information submitted to the PRC will remain private due to a “protective order.”
As many members know, the Broadband $60 million grant and loan bonanza was divided up among the favored few in the “contracts for cuates” program. Trustee family members, politicos, and ex-trustees got the bulk of the dough, according to family members and anecdotal evidence.




Friction supports the election of Luisa Valerio Mylet and Andrew Chavez.
Except for the occasional lapse, Mylet has voted against rate increases “in the past,” against salary increases for the CEO, and against the Broadband project. She voted for the last rate increase “to save employee jobs” and because the Coop can’t survive without a rate increase.


But with a rate increase and without a plan to liquidate all the losing enterprises, Reyes and the Trustees plan to borrow millions more to subsidize Reyes’s vision and travel. for the trustees. The Coop needs to rebuild, refinance, and re-do its failed policies.


Despite his quirky behavior as a County Commissioner, vote for Andrew Chavez. Send a Taoseno to catch a Taoseno.

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