Friday, September 24, 2010

Co-op Hires BKD Firm To Look At Books

By John Severance

BKD LLP out of Springfield, Mo., is coming to town to look at the accounting books of the Socorro Electric Cooperative next Tuesday.
The co-op board, at a meeting that lasted more than four hours, accepted a letter of engagement from the accounting firm Wednesday night.
The contract states that BKD will look at the books from January 2008 to August 2010, interim general manager Richard Lopez said.
Lopez told the board that BKD required a $19,000 deposit and would do up to $38,000 worth of work.
Trustee Charlie Wagner, though, asked if the BKD needed to do some more digging, it could come back before the board for more funds. Wagner was assured that was part of the contract.
“We absolutely need to do this,” trustee Donald Wolberg said.
And the motion passed unaninimously.
While the approval of the BKD audit was noteworthy, there was other stunning news.
Catt Cobb, a rate analyst for SGS Engineering, told the trustees that while doing some preliminary work on a rate study, she found out that the co-op has been overcharging consumers over the past five years.
“The debt cost was not changed over the past five years,” Cobb said. “About $1.75 million had been collected from consumers that should not have been collected. The money has to be refunded to the consumers.”
Cobb and Lopez were in Santa Fe earlier Tuesday to meet with the Public Regulation Commission to discuss the problem.
It was decided that Lopez has to write a letter to RUS in Washington to say it needs $1.75 million from its margin to refund to customers. It’s unsure what the refund would be to consumers.
In the letter, though, Lopez also has to say that the co-op is in the midst of a rate study. And raising the rates will be a reality because the co-op has a negative margin and it is in danger of defaulting in its mortgage to the RUS. If the co-op defaults on the mortgage, the federal government takes over the co-op. RUS’ Larry McGraw says raising the rates likely will assure the co-op of making its margins for this year.

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