Thursday, September 23, 2010

Electric Co-op Votes For A Forensic Audit

By John Severance

SOCORRO – At a special meeting Tuesday night that lasted more than three and one-half hours, the Socorro Electric Cooperative voted to have a forensic audit.
The co-op hired BKD CPAs and Advisors of Missouri.
Trustee Milton Ulibarri made the motion to accept BKD and Donald Wolberg seconded it as the board voted unanimously to approve the audit.
“I’m tired of hearing we are trying to hide something,” Ulibarri said.
The co-op debated whether to put a cap on how much it would spend in the audit but it did not decide on anything.
The board, however, did vote to establish a committee of president Paul Bustamante, interim manager Richard Lopez and attorney Dennis Francish to meet with BKD officials to work out specifics.
The vote was 5-1 with trustee Charlie Wagner voting no and Prescilla Mauldin abstaining.
“There is no reason to peddle this off to a committee to control the outcome,” trustee Charlie Wagner said. “You have to do this properly.”
The special meeting also included a manager’s report, which was submitted by Lopez.
The USDA’s Larry McGraw was in attendance for the second consecutive meeting and the news was not good when it came to discussing the co-op’s finances.
McGraw said the co-op has negative margins for the second consecutive year.
“You are in technical default if you don’t make your margins in two of the last three years,” McGraw said.
But what was really worrisome to McGraw was that the co-op might have a negative margin because of possible upcoming litigation expenses.
The co-op sued its members in testing the three bylaw amendments and since then there has been a slew of counterclaims. The co-op has since voted to drop the suit against its members, but the counterclaims remain.
“You need to concentrate on controlling costs and make rate increases so you can be in line with your mortgage,” McGraw told the trustees. “Right now, the financial condition is not good. You have to limit expenses if you want to make it.”
As far as rate increases, McGraw said if rates were raised $1 per customer per month, that would generate 160,000 dollars per year.
McGraw said the annual mortgage payment is 2.7 million, which includes principle and interest and right now there is $2.2 million in the general fund. McGraw suggested putting the $2.2 million in a CUSHION fund, which also draws 5 percent interest.
“You need revenue to pay your bills,” McGraw said.
McGraw also pointed out that board expenses were close to half a million dollars last year and cutting down those would help out, he said.
A more detailed report of the meeting will appear in next week’s edition.

No comments:

Post a Comment