KCEC Interveners and Members Meet Tonight: Las Pistoleras in El Prado: 7 pm on Thursday. Jan. 5.

By: Bill Whaley
5 January, 2017

 

Introduction

Due to what KCEC Interveners are calling an emergency due to “arbitrary and capricious” billing practices at Kit Carson Electric Cooperative, KCEC members are invited to an “informational” meeting tonight at 7 pm. The latest round of monthly electric bills show a “retroactive increase” on system billings, according to several electrical bills.

At tonight’s working session, Interveners and members will discuss possible remedies to “mismanagement” of both the electric side and diversification at the Coop. Remedies include filing complaints with the PRC and a more drastic “class action lawsuit.”

During the hearings commercial electricity users were unrepresented and Interveners believe unfairly targeted by KCEC and the PRC Commission. The non-residential users allegedly had their due process rights ignored by the Commission and may have recourse in the courts. Neither the Town nor the County opposed the rate increases and may also be subject to censure by members and taxpayers due to fiscal negligence.

This whole thing is a huge “scandal.”

Of particular concern to members is KCEC’s sky rocketing debt: the Coop has said it needs another $8 to $11 million dollars to finish the Broadband project. According to testimony, the Coop has not paid some $37 million in Capital Credits owed to members and plans to spend more than $30 million in upgrades as debt skyrockets upwards of some $175 million.

During the 2016 hearings, Interveners discovered numerous instances of “mismanagement,” “incompetence,” “deceptive” accounting practices much of it covered up by “misrepresentation.” Reyes and the Trustees appear to be borrowing money from RUS and others to pay interest only on loans, an endless cycle.

Deceptive Billing

“Billings show that KCEC has taken advantage of holiday diversions and jumped the gun while charging members at the higher rates  prior to the December 12 PRC permitted rate increase,’ said one intervener. Another Intervener called both the Coop and the PRC but couldn’t get an answer re: either the “billing snafu” or what appears to be allegedly, a “fraudulent” practice.

Interveners have faxed and emailed PRC staff and Commissioner Valerie Espinosa.

In the upper left hand corner of the KCEC bill, members can identify the dates of the “billing period.” Then check for the systems charge in the body of the bill. For the period prior to Dec. 12, a charge of $14.50 is permitted. For the period after December 12, the new rate of $20.50 is permitted. If the figure of $20.50 is listed on any bill prior to the Dec. 12, then it appears that members have been over-charged.

Members should also look at the number of days in a separate lower box that compares the number of days in the current billing cycle with the previous billing cycle, and with charges of a year ago. The billing cycles vary from 29 to 35 days.

KCEC also appears to be charging for an “extra day” each month. For instance bills show, according to one Intervener, a billing cycle that goes from about the 17th of the month to the 17th of the next month. A cycle should end the day before to be fair.

In another attempt to allegedly deceive the PRC and the members, KCEC has substituted a 2014 simplified financial statement re: electricity and diversification per the Dec. 12 PRC order. According to Intervener Link Summers, the PRC required KCEC to file current or year 2016 financial reports, not reports from 2014.

Hearings Exposed Coop malpractice

During testimony at 2016 PRC hearings on the KCEC requested rate increase, Interveners testified to the Coop’s failed diversification projects and losses of at least $6 million since 2000, including the Call Center, Command Center, Propane and Internet.

Separately the Coop appears to have invested about $70 million in Broadband grants, loans, and electricity income to serve 2600 customers, according to Interrogatories and testimony at a cost of $23,333.00 per hook up. In last week’s “whitewash” news from the Taos weekly, Reyes reported that the company suddenly had 4000 customers.

The federal government’s USDA/Rural Utilities Services monitors the financial stability of Coops. In six of the last eight years KCEC has missed making the minimum federal benchmark or “Tier.”

The PRC, including Commissioner Valerie Espinosa, the Taos representative, approved a new and higher tier of about 1.64 percent. PRC Commissioner Pat Lyons opposed the higher figure saying KCEC would use the higher Tier to take on more debt, i.e. borrow and spend.

The Guzman Deal

During the hearing process of 2016, KCEC announced a change in power suppliers and replaced the TRI-State Generator and Distributor, a G&T Coop formed by Colo. NM, Nebraska and Wyoming Coops, with a “financier” out of Florida aka Guzman Energy. Guzman buys electricity on the open market and passes on fuel expenses and higher per-kilowatt costs to KCEC members.

 

What benefits?

The reason for the Tri-State $37 million buy-out has yet to be satisfactorily explained. KCEC Trustee Bob Bresnahan claims KCEC will use solar generation in the future as a result but current PRC staff claims KCEC may be in violation of state statutes regarding current solar generation.

Further, CEO Reyes has said it will take about five or six years before the Coop can free itself from the Guzman contractual obligation of $37 million. The mysterious buy-out of Tri-State came with no “assets” but with an obligation to maintain Transmission Lines and substations at extra monthly costs, according to Coop insiders.

In addition to the $37 million owed to the Guzman financiers, KCEC still owes $5 million for the Plains Electric-Tri-State merger back in the year 2000. More debt, more loans, more interest, less equity.

Trustees

Currently Trustees are making travel plans to attend the annual REA meetings this year in San Diego in early FEb. Last year Trustees visited New Orleans, despite filing for a rate increase and pleading “desperate” financial circumstances.

When Trustee Virgil Martinez protested against the rate increase and current spendthrift practices at a closed session of the Coop, he was “mugged’ by another Trustee in what appears to be a “set-up.”

Martinez and fellow Trustee and fight club member Chris Duran are scheduled for arraignment at Taos Municipal Court on Jan. 10. Despite a record of negligence and poor stewardship, Trustee David Torres, the so-called “General” from El Salto, has announced his intention of running again. Torres has been silent about Coop doings in public.

Intervener Arsenio Cordova says, “We want to keep members safe so we’re holding monthly protest meetings at the privately owned Las Pistoleras.” The Intervener and board member of the El Prado culture institute said he had been in touch with the Coop billing department and PRC staff but had not received satisfactory answers re: billing practices. . “We’ve got to do something,” he said.

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