Coop News and Jailhouse Blues

By: Bill Whaley
21 July, 2016

Whaley 7x5This journalist congratulates J.R. Logan and Cody Hooks of The Taos News for writing (at last, alas) a series of revealing stories about the KCEC. As one of about 8 interveners in KCEC’s rate request case, now in the process of being heard and not being heard by the PRC, I used stories from The Taos News in response to hostile interrogatories about where I got information for Taos Friction: information on KCEC’s $100 million dollar debt, for instance, and news about KCEC’s intention to borrow more money to finish the Broadband project (about $7 to 12 million). Why I read all about it  in the weekly news.

However, this morning’s headlines, “Co-op, PRC staff reach settlement terms in rate case” is less a fact than wishful thinking on the part of the above-mentioned parties. Certainly, the Coop and the PRC staff, per orders from above, are in “discussions” about a settlement. The terms, outlined by J.R., are factually based. However, there’s more to the story, secrets, non-secrets, innuendos, and a great many details left out.

Here’s a bare outline of the scandalous story called the “Black Box of 2014.”

n-snake-lightAccording to PRC rules, KCEC is allowed to request a rate increase for its electric distribution business but can’t use the dough, allegedly, to pay for its real estate ventures like the Call Center and Command Center, Propane subsidiary, or Telecom/Broadband. Under the magical thinking and perverse rules at the PRC, KCEC is allowed by “rule” to use “2014” as a test year.

So PRC staff, economists and attorneys, are only allowed to look at the year 2014 in terms of income, costs, depreciation, loans, interest, etc. Said PRC staff, especially economist John Reynolds, did yeoman’s work while analyzing KCEC’s financials. Among other findings, staff discovered that KCEC had muddled the consolidated bookkeeping and concluded that the Coop’s “cost of service”  consultant allowed  expenses from “diversification” projects to creep into the electricity mix.

The valiant Staff in turn “scrubbed” the books, eliminated expenses associated with “diversification” or side ventures and noted that the “actual” tier or margin at the Coop, the one required by RUS, was higher than the Coop admitted. In one sense, the Staff made the electric cooperative look more financially sound on paper than their consultant had done. So staff suggested KCEC lower its rate request to reflect this new financial reality. Suddenly, they walked it all back and now want to settle with KCEC for a higher rate increase: give the Coop more go juice.

KCEC’s proposed rate structure is like the regressive GRT: it affects low income earners and conservationists disproportionately. According to an intervener in the case, KCEC has ignored Chevron Mining’s increased usage due to continuing Superfund site pumps that will run 24/7…forever.

Luis-RreyesOn Monday, July 18, we interveners motored down to Santa Fe to discuss strategy with the PRC staff for the Aug. 15 hearing. But guess what? KCEC attorneys and CEO Reyes had been meeting, allegedly with staff. Staff then said, rather sheepishly, when we arrived that they were going in another direction. They proposed to include us in settlement talks, discussions that appeared to be “a done deal.” Though shocked by this turn of events, the deal, however, has not been signed off on by either the Hearing Examiner or the PRC.

The real story concerns the tale of the “Black Box of 2014,”  a descendant of “Pandora’s Box.” When you open it, a familiar “hydra headed financial monster” looms up. If you hold up a mirror, you’ll see a faint but unmistakable shadow of breath on the glass, which includes an accounting history of the Coop prior to 2014. This history summarizes the Coop’s stinky balance sheet: running totals of loans, interest, bank notes and debts, etc. Stuff kept secret from members.

The staff, however, is mandated to ignore the historic sources of all this debt, mismanagement, and failed projects, going back to decisions made in 1999. Worse, the staff is not allowed to consider the years following 2014, i.e. June 30 of  2016, wherein the Coop became an indentured servant of Guzman Renewable Energy Partners, an energy financier with plenty of money but no generating plants. The Coop entered into what appears to be a CDO (contracted debt obligation) of $37 million but has not announced how it will pay for maintenance and repairs of transmission facilities, recently purchased from Tri-State.

The Coop, despite its “solar” hype, according to a CEO Reyes speaking on a radio show, is still buying power generated by dirty coal and fracked gas from…Tri-State. KCEC got nothing but debt for its $37 million deal plus more monthly operational expenses. Can you say, “pig in an empty poke?” Can you say “Enron”?

“The Black Box” concept can be understood by anybody who has tried to buy a used car. If the car was driven 300,000 miles prior to 2014 and 200,000 more miles in 2015 and 2016 but the salesman says you should only consider the 20,000 miles driven in 2014, you’d laugh and go home. We’re laughing and we’re home but we’re looking to buy solar panels so when the lights go out we can still see.

The Coop dents and debts of 2015 plus the 2016 Guzman decision to enter a $37 million dollar death spiral doesn’t count against the balance sheet, according to Luis Reyes and the regulators at the PRC. Try buying a house, a car, or applying for a credit card while telling your financier not to check your credit score.

vmartinezNow that La Mylet and El Virgil have joined the Coopsters on the slippery slope of the debt spiral, we members have nobody to represent us but a few stuttering interveners. Apparently theLG luisamylet trustees will get their thirty pieces of silver for next year’s trip to New Orleans and the Energizer Bunny will buy a new truck for his giant ego.

But it ain’t over until they shut the “Black Box.” When the PRC staff rang the bell, we all heard it. There’s a lot of red ink in them thar documents. Ah, Virgil and Luisa, we hardly knew ye.

Sopyn’s Dark Adventure

On June 14, 2016 Judge Jeff McElroy, urged on by DDA Ron Olsen, finally slapped Micola Sopyn in the Taos County jail. Sopyn, the accused murderer of Amber Hava, had been out gallivanting around on and off for months, according to testimony from Martinez tracking. While on conditions of release he had been arrested first for a DWI in November of 2015 by APD and then got busted in the Duke City, (again) at the end of June 2016 for driving on a “revoked license” when he got in an auto accident. The cops ran his rap sheet but he did not pass go and went straight to jail. Then they sent him back to Taos.

McElroy said that Mr. Sopyn would now be held in Taos County lock-up on a “$200,000 cash bond.” If he comes up with the money, he will still serve on house arrest while decked out in Scram and GPS bracelets on both ankles, according to the Judge.

We know who shot and killed Amber Hava. What we don’t know is how she got all those bruises on her body according to the medical examiner, prior to getting blasted by a 12 gauge shotgun.

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