Update: The PRC, KCEC, and the Members

By: Bill Whaley
31 March, 2017

To Vote or Not to Vote?

At the current time the members of the Kit Carson Electric Coop are confronted with a variety of issues, due to the upcoming May election of trustees. The incumbents have neglected their stewardship of the coop and should be asked why they have pursued a policy of “borrow and spend” while throwing good money after bad. The following questions (1 through 10) have been raised by Interveners from the information learned during last year’s rate hearings.

 

While much of the information was declared “irrelevant” in regard to the specific rate increase due to arcane rules, the information gives a snapshot of the Coop’s policies and procedures regarding failed diversification and electricity operations of the Coop at large.

1. Since the year 2000, the Kit Carson Coop has incurred about $6.5 million in debt for diversification projects collateralized by the members’ obligation to pay electricity charges. The Coop’s failed ventures include the 10,000 sq. ft. Call Center and a similarly sized  Command Center, mostly unused, the Propane project wherein a $5 million loan has been converted into an “investment” and the initial Internet project that lost hundreds of thousands of dollars. The Command Center itself, an egregious mistake, costs Coop members about $118,000 a year and serves as the Coop’s emergency dispatch center for outages and is staffed by about two or three employees in a 200 square foot cubicle in the more or less 10,000 sq. ft. building during week-day working hours.

2. The $64 million federal government grant and loan Broadband project has used up an estimated $10 million in electric-side revenue in addition to the original $64 million start-up funds since 2010. Yet BB serves an estimated 15% of the members, according to KCEC press releases.

3. The recent $37 million buy-out of Tri-State cooperative agreement, backed by the Guzman financiers of Florida, who buy and sell energy on the market, remains under investigation by the PRC. The Coop neither requested nor received permission for the change in Generation and Transmission operations Guzman has no generating or transmission capacity.

a. In fact the Coop pays an additional unknown amount per month, estimated at $17,000 or $200,000 annually,  according to the word on the street.

b. The Guzman contract ties KCEC members to a contract with per kilowatt costs as well as arbitrary monthly fuel pass through costs that remain unknown to members.

c. Meanwhile the Coop still owes $5 million to the USDA/RUS for the Plains-Tri-State merger in 2000.

4. The Coop remains out of compliance with PRC request since 2010, regarding provisions for providing financial statements for each separate diversified project instead of the “consolidated financial statements.”

a. During hearings last summer neither the PRC staff or Kit Carson staff, neither Interveners, nor the PRC commissioners and the hearing examiner could confirm the specific costs of electric and diversification expenses, due to muddled financial statements presented by the Coop.

b. In addition the Coop does not provide a breakdown on the differences between kilowatt charges and monthly fuel pass through on charges for electricity on member bills or PRC forms.

5. During the last ten years the Trustees have spent millions of dollars on travel and fees, while charging members for arbitrary monthly meeting and committee per diem expenses. Yet Trustees merely repeat what the CEO says when asked questions but exercise no obvious control over management and employees beyond rubber-stamping requests.

6. Though the Coop received a rate increase in 2016 based on problematical financial statements, the desperate financial plight of the Coop caused the CEO and Coop staff to then bill members retroactively for both residential and non-residential customers.

a. The PRC staff is currently evaluating some 22,000 member billings from August and December of 2016 and members are due an estimated $250,000 to $500,000 in rebates.

b. While the Coop claims the billings were “inadvertent,” and admitted initially to “6500 inadvertent errors,” human beings, i.e. employees under instructions from management, directed the computer-software programs.

c. The Coop did not admit to “inadvertent” billing until Interveners raised the issue in January of 2017, several months after the initial “inadvertent” process, which first occurred in bills to non-residential (government and commercial accounts) in August of 2016.

7. While Management claims the Guzman contract can be rationalized for ultimately allowing the Coop to purchase electricity from solar sources sometime in the future, the current “solar gardens” have raised issues of non-compliance according to the PRC staff and may be out of compliance with state statutes.

a. In other words, KCEC members are paying the “socialized” cost of the solar arrays installed at the Coop, the schools, the university branch, private businesses, etc.

b. While progressive members believe in solar, just as the faithful believe their departure from this earth will be rewarded in spiritual terms, so the Coop uses “renewable energy” as a public relations ploy to seek support for “covering up” flaws in the Coop’s operations. Shame on Taos Renewable Energy advocates who give the Coop cover!

c. Independent members who convert to solar or renewable energy will experience the rewards of escaping from the Coop clutches by separating themselves from the grid much in the manner of the Taos “off-the-grid” extant community like the earthship community, etc. Don’t depend on the Coop.

7. While searching for reasons to excuse their failures, the Coop consistently blames changes in the national electricity industrial complex as well as federal and state regulations and even the residential members themselves for their  frugal and historic patterns of electricity use.

a. The Coop has never presented the members with a management plan wherein the Trustees, Management, and employees also offer to curtail operational expenses in the new energy environment.

b. Despite losses in diversification, the Coop management has never proposed a plan for liquidating operations that continue to lose money.

c. Estimated debt, admitted to by the Coop is in excess of $100 million.

d. Interveners estimate an additional debt, due to Guzman; infrastructure plans for upgrades, Capital Credits (money due members), and other expenses at about $75 million for a total of about $175 million.

e. The Coop has spent an estimated $500,000 on legal talent while fighting the “pro se” Interveners.

8. The Board of Trustee elections in May offer members some opportunity for influencing the Coop culture but due to gerrymandered districts, there is little hope for residents in the immediate Taos Valley district to find enough representation to change the culture.

a. Historically alleged “honest” community members, past and current, who have been elected to the Board of Trustees but then  otherwise joined in the cabal: see Luisa Valerio-Mylet (whom we still love), Toby Martinez, Peter Adang, Bob Bresnahan, David Torres, Francis Cordova, Manuel Medina, et al.

b. The last voice who speaks for members, trustee Virgil Martinez, was humiliated in a board meeting “beat down” allegedly by fellow trustee, Chris Duran, while the other trustees watched with smiles or whined about the lack of decorum.

c. Virgil himself has told this writer that he isn’t perfect and has said on more than one occasion that he and the other Trustees should be jailed for what they’ve done to the Coop.

d. Martinez and Duran are scheduled for trial in May due to the “public affray” nature of the beat-down.

e. According to Virgil’s friends, he will not run for re-election.

9. Due to masterful manipulation, intimidation and promises of special favors by CEO Luis Reyes, the community lacks the leadership to oppose the Coop’s practices. Among those “MIA” are elected leaders at the Town of Taos and Taos County, censors at the Taos News, and business leaders at the Taos County Chamber of Commerce.

10. Since the voting members generally display an apathetic attitude during the annual May elections, this writer urges Taosenos to seek self-sustaining renewable energy, efficient appliances, and alternative imaginative non-Coop solutions to their energy needs.

a. We members are put in the position of “resisting” and refusing to cooperate with our member-owned Coop, which has become a community pariah.

b. Recently the Coop fired five employees for drinking on the job but who can blame them? Obviously management, like the Trustees, neglects supervisory tasks.

P.S A few of us Interveners will continue to file formal complaints with the PRC. We may be Pendejos but we believe the PRC and Coop members across the state are waking up to the culture of corruption fostered by the “borrow and spend” policies of the federal government and the Coop recipients. Unfortunately, unless the members rise up, there is little or nothing we can do about the non-existent ethics and moral standards of most Coop Trustees.

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