Trick or Treat Part III: Hearing Examiner’s KCEC Recommended Rate Increase

By: Bill Whaley
1 November, 2016

Submitted late on Oct. 31

Late yesterday at 4:59 pm, the Hearing Examiner, (HE) Elizabeth Hurst, submitted here rather thorough and clearly written report on the KCEC request for a residential rate increase. (Part II, the adjacent story, was written prior to the submittal from the HE.) Basically, the hearings and HE focused on the year 2014 as a test year. Testimony and evidence about “diversification” or “Guzman” are irrelevant due to being outside the purview of the HE under the aegis of the PRC order and/or outside the time frame. The PRC rules allow KCEC to present a truncated view of utilities for consideration. It’s sort of like looking at the reasons for an absence of water in an acequia without checking on the watershed or the weather before and after the circumstances of a drought.

Nevertheless, the Interveners, according to the HE’s recommendation stopped KCEC from increasing rates on the non-residential ratepayers from January to July. The recommended increase in residential rates will go into effect, given the PRC approval, probably in Dec. So Interveners saved local members and residential users of electricity about Two Million dollars this year.

Meanwhile the HE is recommending that KCEC be allowed to charge residential customers a total of $2 million but $1.5 million less than the $3.5 million asked for by KCEC, a slight success for members. KCEC didn’t get it all.

The rate increase will come from increasing the service charge on meter connections from about $14.00 to $20.50. The HE also recommends KCEC retain the “inverted rate structure” which means consumers will pay at an increasingly higher rate for more electrical usage. (It’s like a progressive income tax.) The new rates still reward conservationists and low usage residents, another slight victory.


Briefly here are the costs per kilowatt-hour:

0-750 kWh $). 11349
750-1150 $0.12430
over 1150 $0.13511

From the Intervener’s point of view, the HE’s recommendation reflects a cautious and conservative response to an archaic way of regulating a Coop. Regulations ignore standard business practices: the fix is in for the regulated. So we activists can call the decision a victory for members.

If KCEC members want to protest and complain about KCEC’s rampant “diversification,” they will have to file a complaint using a different statute as the source, a source that does allow for more regulation of “diversification.” In yesterday’s post I numbered sentences as paragraphs in order to explain how, based on interrogatories and testimony, KCEC has gone awry.

Participating in the difficult and absurd process of rate request hearings is not for the faint hearted. KCEC’s high-powered sharks come after you with teeth bared. Vested interests, the attorneys, trustees, executive staff and the PRC regulators themselves, have created a “hydra-headed monster” when it comes to the hearing process.  Interveners estimate the Cuddy-McCarthy law firm probably charged in the neighborhood of some half-million dollars to fight off the penniless but “pitiless” Interveners, who refused to take no for an answer or even obey the absurd restrictions per the “2014 test year.” The fix was in but the HE wouldn’t buy the package and the Interveners gave as good as they got.

The Coop shock troops wasted a ton of dough on absurd interrogatories, legal puffery and fluffery at the CEO’s direction, who led the charge of a typical gang of northern New Mexico “movida makers.”

During the process the PRC staff, if not their supervisors, earned our respect: John Reynolds, Vincent De Cesare, and Milo Chavez. Participating interveners (in no particular order) included Peggy Nelson, Jerome Lucero, Fabi Romero, Link Summers, Arsenio Cordova, Gene Sanchez, Rose DesGeorges, and this writer.

Privately, due to long experience covering the Coop and speaking to Trustees “off-the-record,” the hearings mostly confirmed with facts much that I had speculated about. The Coop is in worse shape than any of us had thought. Management flies by the seat of its pants and ignores best practices in just about every category. For all the talk of “diversification” there are no feasibility studies or business plans. It’s a “by guess and by golly” outfit. Since I put all this work into my “Coop Studies,” I’ll be ready to oppose the next rate request increase.

As for the KCEC members, I urge all to look into buying solar panels, improving insulation, and buying energy efficient light bulbs and appliances. Become as self-sufficient as possible. Many members, both commercial and residential, have spoken to me about the Coop’s stonewall when it comes to hook-ups for Broadband. KCEC does not have the expertise or the money to complete the $64 million project. Perhaps the rate increase will give the Coop a chance to borrow more money…somewhere…to complete the Broadband. Meanwhile, get in touch with or maintain your service with Century Link or Taos Net.

Ask your trustees and community leaders why they keep on throwing good money after bad and paying a chief executive who has missed making “TIER” six out of the last eight years. Ask elected officials why they support a financially “moribund” Coop that is slipping down the slope into insolvency i.e. throwing good money after bad.

That’s the Way it is during these, the Days of the Dead, at the Coop, where the ghosts appear on the last Tuesday of the month at KCEC and call themselves “Trustees.”

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