City looks at electric concerns
A variety of concerns were discussed during the Socorro City Council's public hearing on the city's franchise agreement with Socorro Electric Cooperative during the city's regular meeting Monday.
Mayor Ravi Bhasker said the public hearing was the first of a few the city plans to hold about the franchise agreement, saying possibly five or six will be held by the time the city approves the agreement. He estimated that could be January or February 2014.
Charles Wagner, who represents District II on the SEC Board of Trustees, was first to share public comment. The first concern he discussed was SEC's unauthorized $1,000 donation to the Socorro Public Library. He explained the co-op is supposed to operate at cost, accumulating no more revenue than necessary to meet its debt obligation for the next year.
Wagner said the co-op is not supposed to make donations other than to the Socorro Electric Scholarship Fund; any unused profits are supposed to be returned to its member/owners. The scholarship fund only gets the unclaimed capital credits of people who leave town without providing a forwarding address.
"We're making decisions to donate for our members," Wagner said, "because anything we don't spend in operations is their money. It's supposed to make its way back to them … We shouldn't make those decisions for our members."
Bhasker and city Clerk Pat Salome asked if New Mexico Tech pays franchise fees such as residential customers have to pay. Wagner thought Tech does pay the fee, but he wasn't sure. He said he would like to see a copy of the franchise agreement but hasn't been able to get one from the co-op.
Wagner added another concern was the fees the co-op charges for pole attachment, or for another company to share its poles. He thought the average for other places around the country was $7 per foot of line attached to a co-op's poles, but SEC doesn't charge anywhere near that much — "and we probably should be."
Marie Watkins was next to share concerns, and she brought up the double line from Arizona erected to bring a lot more power to benefit Tech and the Very Large Array. However, she said the cost has been distributed among all SEC customers.
"So basically, the poor people in town are subsidizing the VLA already," Watkins said. "So I think as you work out your plan with Socorro Electric, it would be important to notice inequities like that."
Watkins also said SEC frequently does not abide by open records laws. Instead, the trustees sue the member/owners, then the member/owners end up having to pay for their own attorneys and the board's attorneys.
Watkins said part of the franchise agreement should require that the city be provided a full set of SEC's records. That way, if member/owners couldn't get access to SEC's records, the city would have a backup for them to look at. She said the membership rolls, for instance, should be available for the public's perusal.
Bhasker agreed the city's access to SEC's records is an important part of the franchise agreement.
Charlene West believed Tech and VLA get a break in their rates, but not residential customers. Bhasker said the city wants to make sure everybody is treated the same.
Salome said the city can't dictate electric rates; however, when rates come before the Public Regulation Commission, the city can ask questions and help ensure the rates are fair to everyone.
Wagner said there is a misunderstanding of the relationship between the co-op and the PRC. He explained the Board of Ttrustees files a proposed rate increase with the PRC, which is then approved automatically unless at least 25 residential customers file a complaint with the PRC within 90 days of the proposal. For a raise in commercial rates, 1 percent of the businesses have to file a complaint. If complaints are filed, Wagner said the PRC suspends the new rate for nine months while the PRC determines if the rates are fair.
Wagner said the last rate increase was large for customers at the lower end of the consumption spectrum — a 35 percent increase — and only 10 complaints were filed with the PRC. Councilor Toby Jaramillo asked if the co-op lets customers know about the 25-complaint requirement to get the PRC to review a rate hike.
"That's somewhat of a secret," Wagner said. "But they do publish the rate increase at the time they submit it to the Public Regulation Commission."
Bhasker said the city is concerned about whether the rate structure is applied fairly across the board.
Wagner listed another problem: The law firm representing the co-op Board of Trustees seems anxious to bill for more hours for handling lawsuits, and appears to encourage people to sue. He told of an instance West had to sue for a list. West won in court, but she had to pay an attorney.
"And, of course, the co-op's attorney got paid for going to court in a situation that she knew she was going to lose," Wagner said. "That's the kind of frustrating thing that happens."
Wagner stressed all the member/owners, including the city, need to be concerned about the co-op, read the bylaws, and get active in meetings and elections. The co-op is democratically controlled by its members, he said.
Wagner said electricity through SEC probably costs 26 cents per kilowatt hour, which is higher than average across the country. Bhasker asked how much PNM charges customers; Watkins said PNM's base charge is half as much as SEC, and half as much per kilowatt hour.
Wagner noted co-ops serve low population areas, so they don't enjoy the economics of scale such as a larger company like PNM, which serves Albuquerque, Alamogordo, Silver City and other places in the state. He said the co-op is not able to be as efficient due to the low population density of the area served.
Bhasker said that would mean the city of Socorro could raise its water, sewer and natural gas rates, but the city doesn't do that. He said Socorro's rates fall about in the middle among communities across the state. Bhasker questioned whether the economics of scale hypothesis is true.
"I'm not saying that the city is interested in running the co-op, but I think there needs to be some stress placed on competition," Bhasker said. "And if it's a monopoly, it's difficult to have any competition."
One woman said a lot of people in the co-op's service area have no electricity because they can't afford it, and the SEC is supposed to be a nonprofit co-op — yet the SEC gave its unauthorized contribution to the library. She said SEC should instead set aside money for the elderly and other struggling people to have electric service. She added another 4.9 percent increase is coming before the PRC soon.
"Look at what they're spending money on," Wagner said. "When they sued all of the members, including the city, that cost somewhere between — they won't give me the numbers — but it cost somewhere between $300,000 and $500,000 for their lawyers. … That seems to me like that is against their fiduciary duties. That's ridiculous.
"They lost the suit, but they still incurred the cost of all of those attorneys."
Bhasker said the city has a duty to look into all of the concerns brought up during the public comments. He said the city will make the draft franchise agreement available for the public to review before the city ever signs it.