Proposed electric rate increase is based on lies

Lies are being put forth by the city as it gets set to increase our electric rates.

First lie: Rates have not increased since 2001, as stated by Electric Department Director Bo Easley at the August 9 meeting, according to the Sentinel article by Chuck Wentworth, “City Eyes Electric Rate Increase.”

Nope. In 2009, when Jaime Aguilera was city manager, he increased what was once called the “pass through” charge from a little over two cents a kilowatt hour to over four cents a kilowatt hour. Therefore it has been 14 years since we had a rate increase.

Second lie: The “energy cost adjustment” on your electric bill represents the city’s cost of purchasing electricity from its wholesalers.

Nope. Our wholesalers are Western Area Power Administration, Sierra Electric Cooperative and whoever owns the solar farm near the county fair grounds at the moment (it’s changed hands so often).

The electric charge used to be rational, that is, a kilowatt-per-hour charge and a base fee of $8.00 per month. Around 2007 or so, a “pass through” charge was added. City commissioners didn’t want push back from customers about the rate increase from nine cents a kilowatt hour to over 11 cents a kilowatt hour. They were just passing along the wholesale rate increase, not raising the city’s rate.

In 2009 Aguilera untethered the pass through charge from increases in wholesale rates, with city commission approval, and said it would represent any increases the city-owned utility experienced—fuel, wages, equipment costs. The name of the charge was changed from pass through to “energy cost adjustment.”

1898 & Company, the firm hired by the city to do the electric rate study, conducted by their man Craig Brown, was either falsely told the energy cost adjustment charge was the city’s wholesale rate or he took the name of the charge to be factual and was never corrected by city staff. Wentworth, in his article, paraphrases Brown as claiming that wholesale rates have doubled over the last 22 years. But the energy cost adjustment has never been the city’s wholesale rate. I agree with Brown’s assessment that the city’s charges should break out such things as wholesale costs and operations costs and I hope the city continues to do this basic analysis to justify its rates to its customers—as does any fair and just electric provider. Because the city-owned electric facility is not overseen by the state Public Regulation Commission it has never had to justify its rates.

Third lie: According to George Szigeti in Wentworth’s article, increasing the city’s rates would, “bring them in line with other communities.”

Nope. The city’s current rate is .1314 cents per kilowatt hour, which is the 9 cents and .414 energy cost adjustment charges added together. According to Chooseenergy.com’s August 2023 report, the average kilowatt-hour rate in New Mexico is .1330 cents—which goes to show how high our electric rates have been for the last 20 years, since they are only now at the average rate. If rates go up 5 cents a kilowatt hour we will be way over the average.

Lie of omission one: The city’s electric and other utilities’ rates have been increased, but it’s hidden and not on your bill, but you end up paying for it. The city started charging each utility for “administrative costs,” and transferring that money out of customers’ cash funds. One would think that the base charge, the $8 a month for residential and $23 a month for large commercial electric users would cover the utility office’s administration costs. Nope. Of late I have not kept track of the amount transferred out of the utilities for administration fees. I think it started under past-City Manager Juan Fuentes, which would make it a 13-year-old hidden rate increase. I think I remember it was initially $85,000 a year that was transferred from the water, wastewater, electric and solid waste departments when it started. I am certain it was up to $100,000 a year from each department from 2019 to 2022. The city has about 4,000 electric customers. Each electric customer pays $25 a year for each $100,000 transfer. The city has fewer water, wastewater and trash customers, so each customer pays more than $25 a year in hidden charges for those utilities. I receive all four city utilities, therefore I, and many of you, pay more than $100 a year in hidden utility fees.

Lie of omission two: The transfers out of the electric and other utilities are hidden rate increases since we will now have to pay for the upgrades and maintenance so long neglected at a rate higher than yesteryear’s costs.

Brown shed some truth and light during his presentation at a June city commission meeting. It was refreshing to hear him say, baldly, that the city had taken an average of $1.5 million a year out of electric fees and transferred it into the general fund. (Aside: I remember, under past-City Manager Juan Fuentes, that some years $3 million or more was transferred out of the electric fund.)

Brown said that the same yearly amount, $1.5 million, will have to be put back into the electric fund via rate increases for the next five years or so to make up for the facility’s neglect. That $1.5 million a year is in addition to not transferring money out of the electric fund and into the general fund.

Past commissioners such as Evelyn Renfro, Frances Luna and Jerry Stagner often stated that T or C was an electric company that ran a city. It is only this year that transferring money out of all city utilities has stopped. Although Mayor Amanda Forrister and Mayor Pro Tem Rolf Hechler claim they “inherited” the utilities-in-crises problems, Forrister passed four budgets that raided utilities funds and Hechler passed seven or eight budgets that raided utilities funds.  Every commissioner sitting currently and in the past has passed budgets that raided customers’ utility funds. That is a warped, non-transparent and non-democratic view of city government. It exploited its citizen rate payers instead of charging them only what was needed to provide the necessary service while hiding those charges and costs and where the money was going. This warped view of government is apparent in the lies still being told to citizens to explain rate increases. This warped view of government is why the water, wastewater and electric utilities are failing now. And why citizens and customers will pay and pay and pay.

Don’t believe what city staff, Public Utility Advisory Board members and city commissioners are selling. The lies are meant to hide the many, many years of very bad city management.

I find it infuriating that the city commission is going to increase rates without revealing what is going on with the sale of the electric facility to Sierra Electric Coop, which has also been a non-transparent process for nearly three years.

I did an Inspection-of-Public-Records request for the studies being conducted concerning the sale and was told they will not become available until after the sale.

No doubt the studies include toting up how much the electric utility’s assets are worth, that is, their “book value.” I bet the book value was near zero. A 2015 electric engineering study and the city’s comprehensive plan both estimated the city’s transmission lines are so old they were leaking 20 percent. It must be much worse nearly nine years later.

The most significant electric-facility asset on the books is likely the new transformer. The grid almost went down three years ago and an emergency purchase of a $1.3 million to $1.6 million transformer was made. The money was borrowed since the electric fund cash went to buy electric smart meters for about $1 million. The interest rate on that loan should be considered a rate increase. We now have to purchase a second transformer. Both of them were over 60 years old and the expected life of such a transformer is 50 years.

Hechler insisted at the June meeting in which Brown presented the rate study that any rate increase must be considered in relation to the possible sale to Sierra Electric Co-op. Yes, it should. Why should we pump $1.5 million a year in repairs to the electric facility only to sell it? Now he is silent on that point.

The Sierra County Sun did an electric rate study in 2021, which is included below. Szigeti and fellow PUAB member Jeff Dornbusch said the article was full of lies and “made the city look bad.” When I asked Szigeti for specific corrections I received his usual response: silence.

When I call out lies I give specifics. I welcome corrections.

https://sierracountysun.org/government/t-or-c/how-t-or-cs-electric-utility-rate-compares-to-other-cities-in-new-mexico/