Kit Carson Coop Rate Hearings Re-booted

By: Bill Whaley
3 August, 2016

In a temporary victory for members of the Kit Carson Electric Coop, the hearing examiner, Elizabeth Hurst, in the Kit Carson rate case yesterday, issued an order calling for a delay and re-scheduling of the hearing process.

(See order excerpted below.)

Taos Interveners, members of the Coop, by protesting the rates and asking for a hearing have not only staved off rate increases for 2016 but forced the delay of a final decision, which will, in all probability, not take effect until 2017. Interveners estimate that the delays due to protests will save members (conservatively) an estimated two million dollars this year.

The proposed “stipulated agreement,” mentioned in news reports last week, by PRC staff and KCEC created a snafu, due to violating the PRC guidelines. The original order “narrowed” the issues and was sought by KCEC itself. But the Coop got greedy and expanded beyond the guidelines, seeking an extra three quarters of a million dollars from non-residential sources, as I understand it.

The PRC staff and KCEC, who contracted “foot in mouth disease,” got their knuckles rapped by the examiner, Elizabeth Hurst, a stickler for the process, the rules and regulation governing rate cases. I want to say it again:  KCEC and Staff shot themselves in the foot. We Interveners were merely spectators yesterday.

The decision by Hurst, seeking clarification, referred to below, asks why she should be allowed to hear arguments pro and con re: the “stipulated agreement” due to its violation of the PRC rules.

Due to “hubris,” call it arrogance, KCEC, in the person of Luis Reyes and, according to last week’s Taos News, which played the role of “publicist,” had ballyhooed the “stipulated settlement.”

But this case ain’t over until the Hearing Examiner and the Public Regulation Commission sing. Knowledgeable observers say the case will not be concluded and higher rates won’t go into effect until early 2017.

Recently, KCEC has made much of the Tri-State buyout of $37 million, which Reyes claims will liberate the Coop and save members some “$50 million.” The deal allegedly does away with the cap on renewables. Here’s a factoid: KCEC still carries a $5 million debt on its books left over from the merger of Plains Electric and Tri-State back in 2000.

Now the Coop is adding on another $37 million obligation from another “supplier,” which dough Reyes claims is not a “debt.”  Meanwhile, we hear on good authority that KCEC and RUS have been negotiating for the last year on “accommodations” because KCEC cannot meet deadlines on loans? (We’re only asking.)

KCEC’s equity has fallen to about 27% in relation to its increasingly high debt, according to its own reports. The Coop is also experiencing declining margins or gross profits on electric sales. The members’ capital credits, reserves, and cash flow from electricity revenue have all gone in to support what appears to be failed diversification projects, including the “hydra-headed Broadband techno monster.”

The alleged mismanagement of the Coop, now seems like a fact of life. For the last 15 years, the “hope” of diversification has turned into “despair” and  threatens the very operation of the local Coop. While community leaders and the Trustees still buy into Luis’s starry-eyed vision of the future, the present has arrived in the shape of a figure from Day of the Dead. And he’s got a very big grin on his skeletal face.

CEO Luis Reyes, of whom I’m very fond as a local character, embodies the persona of the imaginative “energizer bunny” in contrast to the Rip Van Winkle trustees, who sleep with their eyes wide open. While Luis has been shucking and jiving throughout the last 15 years, his Trustees have grown increasingly passive, sleeping through crisis after crisis, while dreaming about their travel vouchers. When will our amigos and promos, the lost ones Virgil, Luisa, Manuel, Ambrose, Art, Jerry, Bruce, Chris, Bob, David, and Bobby wake up?

Reyes claimed in front of the Taos County Commission that KCEC is in a position to stimulate “economic development” via Broadband-Telecom. Yet the Coop lacks some “$8 million” to complete the hookups between the “drops” and the residential and business consumers, who want to connect. (They spent $64 million in a gov. grant and loan plus Coop electricity money but can’t close the deal!)

The Coopsters, with Luis as chief complainer, will blame the members and protesters for this setback when they should be looking in the mirror.

Through the law firm of Cuddy and McCarthy, the Coop may have “exercised political pressure” and persuaded the PRC staff to “go along” with the “stipulated agreement.” But now the attorneys and staff have  both stepped “in it.” Nobody’s singing but the red-faced bureaucrats and attorneys in Santa Fe are poring over their briefs and rate schedules, getting ready to try and persuade the Hearing Examiner that they can do better. My compadres from Catholic School will recognize  the ruler that raps your knuckles when you screw up.

While the Coop is spending hundreds of thousands of dollars to fight the members, they could have settled this case inexpensively by meeting with the Interveners. The Trustees of the KCEC should be ashamed for neglecting their stewardship of the Coop and fighting the members, their own constituents. As Flavio says about the collective enterprise: “I fee sorry for Kit Carson. Sin Veguenza.”

FIFTH PROCEDURAL ORDER

THIS MATTER comes before Elizabeth C. Hurst, Hearing Examiner for the New Mexico Public Regulation Commission (“Commission” or “NMPRC”) in this case, upon her own motion. The Hearing Examiner being fully informed in the premises, and finding that it is necessary to provide for further procedural dates and details, FINDS, and CONCLUDES that:

1 . A Stipulation was entered into by Kit Carson Electric Cooperative, Inc. (“KCEC or Kit Carson”) and the Commission’s Utility Division Staff (“Staff”) and filed on July 25, 2016.

On July 26, 201 6, the Hearing Examiner issued a Fourth Procedural Order that required that any opposition to the Stipulation was to be filed on or before August 1, 2016, and set a status conference for August 2, 2016, at 9:30 AM in order to provide for further procedural dates and details for processing this case, including the filing of testimony in support and/or in opposition to any stipulation. The status conference was held on August 2, 201 6, and was attended by representatives of Kit Carson, Staff, and Pro Se interveners-
Sanchez, Cordova, Nelson, Romero, Lucero, Des Georges, Whaley, and Summers.

Various procedural dates and details were discussed. Pursuant to request, the Hearing Examiner now lists the order of evidentiary presentation and/or cross-examination at any hearing (by intervention date): l) Summers; 2) Lucero; 3) Cordova; 4) Whaley; 5) Rosenberg; 6) Nelson; 7) Romero; 8) Des Georges; and 9) Sanchez.

At the status conference, the Hearing Examiner asked various questions, which she indicated were to be considered as Bench Requests, regarding the eleven KCEC rates contained Exhibit A to the Stipulation and ordered that Staff and KCEC provide written answers by August 5, 201 6, as to what changes, if any, were being proposed in the Stipulation to the components of each rate, including customer/service charge and kWh components.1

Additionally at the status conference, KCEC and [PRC] Staff were also ordered by August 5, 201 6, to provide a rate and issue matrix that set forth:

1. KCEC’s current rates;
2. The KCEC proposed rates;
3. Staff’s proposed rates; and
4. The Stipulation rates.

Further the issue matrix is required to include Kit Carson’ s and Staff ‘s original positions, and their stipulation positions, on the 6 issues as set forth in paragraph 25 as being the limit of the hearing and review in this case, by the Commission in the March 2, 201 6, Order on Kit Carson Electric Cooperative,
The Hearing Examiner anticipates that these changes, as well as other issues, will be addressed in detail by KCEC and Staff in their testimonies in support of the stipulation. Rates” refer to those KCEC customer rates that were included in Advice Notice 60 and/or the Stipulation.

Further at the status conference, the Hearing Examiner ordered KCEC and Staff to file by August 9, 2016, a legal brief on what authority would authorize the Commission to hear the non-residential rates proposed in the Stipulation, especially considering the arguments made in KCEC’s Motion to Narrow the Scope of Rate Hearing, and the Commission’ s March 2, 201 6, Order. (Editor’s Bold)

This legal brief shall address any due process issues regarding inadequate notice of changed rates, and changing rates that were not included in Advice Notice.

If they choose, lnterveners may file a legal brief regarding these issues by August 9, 201 6.
Finally at the status conference, the Hearing Examiner set a hearing schedule for this case.

The Hearing Examiner being fully informed in the premises, ORDERS that:

The Hearing scheduled to begin on August 15, 2016, is 1. VACATED.

A Hearing scheduled to begin on October 17, 201 6, at 9:00 AM and continuing thereafter, if necessary.
By August 5, 201 6, KCEC and Staff are required to submit written answers to the Bench Requests requested by the Hearing Examiner during the status conference and as referenced in Item 4 above.

By August 5, 201 6, KCEC and Staff are required to submit a written rate and issue matrix as a Bench Request requested by the Hearing Examiner during the status conference and as referenced in Item 5 above.

By August 9, 201 6, KCEC and Staff shall file, and lnterveners may file, a legal brief regarding Commission authority to hear the Stipulation, including the issues of the narrow scope of this proceeding as ordered by the Commission, notice, and due process, as set forth at the status conference and referenced in item 6 above.

By August 1 5, 201 6, KCEC and Staff shall file testimony in support of the Stipulation.

By September 21, 201 6, lnterveners opposing the Stipulation may file testimony in opposition to the Stipulation.

Any rebuttal testimony shall be filed by October 5, 201 6.

All other parts of the Procedural Order issued on March 16, 201 6, the Second Procedural Order issued on March 30, 201 6, Third Procedural Order issued on June 7, 201 6, Fourth Procedural Order issued on July 26, 2016, not changed by this Fifth Procedural Order, are in full force and effect. ISSUED at Santa Fe, New Mexico this 2nd day of August, 201 6.

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