20220218Company Response to the Order to Show Cause.pdf

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1.) Order to show cause. Why the commission should not impose all penaltids'
here-in.
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Addressing the first group of penalties which have been on hold. I
would like the commission to consider that if in all of these
negotiations we find it necessary for me to take a large discount off of
the appraisal, maybe 5100,000 or something, isn't that almost a form
of penalty because all I'm trying to do here is get back some of my
money for retirement, most people in life put money in a 401k or
different things I ended up spending most of my after tax dollars on
this utility. We are dealing with 37 years of my life and $100,000s of
thousands of dollars, t would like to ask the commission not to just
throw this together or take it lightly.
One reason would be that we have been working with the co-op, they
were told that they need to remove the dieselgenerator from my
property, and I want a plan from them, and ifs been about 8 months
and I haven't heard from them other than someone said I should move
it and that's not going to happen. This addresses the first $LZ,OOO
worth of penalties; they should still be on hold. The latest group of
penalties for non'reporting for the years ol202O and 2021. As the
commission is well aware when I was reminded that those had not
been filed and paid, I immediately got on the horn, and we filed and
paid them. The main reason I can offer that they were not paid and
filed in a timely manner is I was pre-occupied with trying to survive
covid. I almost died. Last summer, in June I decided that I would like
to come to ldaho and Atlanta and work on the issues with Atlanta
Power, upon arriving in Boise I had a huge, infected abscess on my
stomach, I was checked into the er on two different occasions, I was on
4 antibiotics, they had to cut open the abscess and it took weeks for it
to drain. At that point being 67 miles into Atlanta didn't seem like a
good idea, lwasn't comfortable with it because I was sick. I realized
that I needed to stay somewhere closer to medical care. I stayed at my
nephert's ranch, after about 2 months I was finally healed.
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2.) Should we open a new investigation into whether or not the company is providing safe
and adequate service to its customers.
That is up to the commission if they want to, that would be fine. That
being said we are working on a sale with Gene Haught and Nick Johnes
and supporting them on making necessary repairs, supplying them
with parts or whatever is needed. So if the sale occurs that issue
becomes moot but Nick Johnes has told me that he has a plan to
upgrade the electrica! system around town. Which should cost around
$20,000. This brings up an interesting point, you can blame allthe
people you want but 570,000 can't come from cash flow. You will need
to have a rate increase and a rate case to do this but let's stop here, I
have been brought before this commission because Atlanta Power
needs to supply safe and reliable power and that is true but at this
point there really needs to be a major upgrade to the system which is
the 570,000 we are talking about. We don't have this much money
sitting in an account somewhere so even though the law says it must
happen, l'm sure the commission would agree that a rate increase
would be necessary and a rate case. This brings up a question I am
trying to figure out in the appraisa! in the sale for Atlanta Power, they
suggest SZOO,OOO but we are now talking about SZO,OOO if this is paid
through a rate increase why should it come off of my appraisal.
One of my questions is why should my equity be used to do repairs
that benefit the company many years down the road which would add
value to the company. I would also like to point out to the commission
that accepting 5365,000 is far below what the final numbers on the
appraisal is (which still need to be put together) but l'd say at this
point they are far north from half a million.
We would like to ask if the commission has considered the offer on the
table from Gene Haught and Nick Johnes?
3.) Appoint a receiver or similar relief should not be employed to operate the company due
to its continued failure to comply with ldaho statutes and the commissions regulatory
authority to ensure the provision of safe and reliable service.
Once again, with the ongoing sale my opinion is the best people to
help with continuing operations are Gene Haught and Nick Johnes but
for the commissions comfort, Genes wages are pre-paid through this
coming June at $800 a month. Linda's are paid through April. The
property taxes are current through October, we have a bill with water
district 69 for about 5160 and some fees with the Boise National Forest
that are due, but we have no long-term debt. So, lm not sure what a
receiver would be doing at this point, we are co-operating with the
commission and there is no emergency that a receiver needs to deal
with.
4.) lt is further order that the company shall provide contact information on how customers
should contact the company on service issues at the show cause hearing.
The first point of contact is Gene Haught, his phone number is 208-
864-2L7O. I usually receive a callfrom Gene if it something he needs to
speak to me about. lf he is unable to reach me, he calls my daughter
Sara who knows where l'm at and how to get ahold of me. As far as
contacting me by mail, the address that I am still receiving mail at is
lsrael Ray
508 Auklet Place
Fairbanks, AK 99709
And by email at [e-mail]
5.) lt is further ordered at the show cause hearing the company shall provide the
commission the foregoing information whether the company is still negotiating a
potential transaction with aecc, if not why? lf negotiations are ongoing what terms
remain to be negotiated?
-Atlanta Power had ongoing discuss:ons with the co-op about a sale and
this subject was discussed. We discussed with the co-op that they need to
find a new home for the dieselgenerator and other equipment that is on
my personal property, and this was brought up early this spring. We
spoke with John Howard, a member of the co-op board and also spoke
with Gene Haught, who is also a member of the board. Gene and I have
had discussions about this possibly moving it down to the dam but getting
approvalfor diesel storage that close to the dam will probably be
impossible. I do not have to allow the co-op to leave the diesel generator
and other equipment on my personal property. I have been waiting for a
response but again, haven't received one.
6.) lt is further ordered that the company shall provide copies of any appraisal and
associated studies or surveys of the company's system completed to further a potential
transaction at the show cause hearing.
I have had the appraisal read to me, I haven't seen or had a copy of
the appraisal. While filing our gross operating revenue statements I
realized they didn't match the 550,000 number used by the
appraiser, so I investigated it further and realized it didn't include
things such as accounts receivable so I would like to discuss that
here. When read to me, the appraisal was basic. Linda had
provided the appraiser with her deposits and that figure was
around SSZ,OOO but after looking at that number it does not match
our gross operating revenue for that year. !t did not include 510,000
that I had deposited into the account. lt did not include any of the
accounts receivable that year for the Green Valley Ranch. We had
accounts receivable in the neighborhood of Stg,OOO on the books
which have been left unpaid by The Green Valley Ranch. lt also
didn't include accounts receivable for Atlanta Gold Corp. of around
Sg,O00 which has now been paid. This increased the valuation of
512,000 + 53,000. This would increase the appraisa! value by
another S1SO,OOO. Basically $1S,OOO x 10 for the earnings. These are
some serious issues with the way the appraisal was done. The
appraisal has a deduction off of their SSOO,OOO number of 5200,000
for rebuilding the system. Then upon visiting with Nick Johnes (who
is a licensed lineman and very knowledgeable about power line
buildingl about the cost of repairing the system, Nick discussed
with me that as of late he has given the co-op a number for those
repairs of around 570,000, he also quoted to me that was a very
rough number but that SZO,0OO was a good ballpark number but
not near s200,000, that alone adds to the valuation to Atlanta
Power of 5130,000 that takes it from 5300,000 to 5430,000. After
looking at this my question is, was this even a licensed appraiser. I
did not pick him, I had no knowledge of his qualifications but just
simple math shows you the appraisal was off by more than
SZOO,OOO-S3S0,000. l'm sure someone has a copy of the appraisal
and can supply it but I do not at this point have a copy.
7.) IT IS FURTHERED ORDERED that the Commission directs the Company to provide
the Commission with a response at the Show Cause Hearing to explain how it will
address the numerous issues with the Company's service reliability and system as set
forth in StafPs Report, dated December 28,2018, and attached hereto as Attachment A,
including but not limited to those parts of the Company's system discussed in the
Findings above atpage 12.
-We have been working on the system and I would like to know if Gene
Haught could address the commission on some of these issues, he has
more direct knowledge on different repairs that we have been taking
care of and also a sale to Gene and Nick would be in the best interest in
the company as Nick is way more than qualified to deal with all of this.
The commission also is concerned that the condition of the company system has not improved
since case no. ATL-E-I8-01.
We have been working close with Gene Haught and Nick Johnes
this spring for example we bought a new $31600 air compressor
for the compressor house (which by the way the gates on the dam
operate flawlessly and are not in-operatable, that statement could
be further from the truth).
*Low hanging service lines- This summer we put in some new poles in areas
where lines were low hanging.
*Poles rotted at the base or leaning- Gene Haught has been addressing each of
these.
*Antiquated transformers and leaking transformers- Im not aware of which
ones they are talking about but we have bought some new transformers, even
last week
*Service drops to meters supported by a piece of wood above customers
rooflines- I would hope that Gene Haught with his knowledge of that could
answer the commission.
*Inoperable spillway gates that control the flow of water into the reservoir-
First of all whoever assessed this situation does not control water into the
reservoir it controls the level and the water flowing out of the reservoir. The
spillway gates are mainly used during spring run-off, high water events, when
we lower them to the deck of the dam to allow large amounts of water which
occasionally can be 5-7 foot deep over the dam during run-off and we can
occasionally use the gates if a large log gets on top of the dam, which almost
always occurs during high run-off. The rest of the year we block up the gates
with 3-foot steel pins because there is no reason to run the compressor and
wear it out and the compressor takes power which is needed for the system
and also will occasionally bump the system if the cycles are low the
compressor comes on, it can throw off the system, it's a 7 horse motor. In the
spring after high run-off, we let the gates down and drain the reservoir, put
the gates back up and at that point we have 45 minutes to go out on the dam
and install the 3 foot pins. They maintain the reseroir level correctly until
next spring when we remove them for a couple of months. There are no
serious issues with the gates, the only issue is a small leak which causes the
compressor to come on about 1-2 times an hour. If we do not block up the
gates and the polyer goes off in about half and hour to 45 minutes the gates
begin to drop. If the gates drop clear to the deck of the floor of the dam, it
takes a considerable amount of time to fill the reservoir and the diesel
generator has to be turned on to run the compressor. AIso, if were in the
middle of the summer, this draining of the reservoir, if the forest service or
fish and game see it, they report us and file a complaint that we are
abandoning our responsibilities for the bull trout, so as long as I am running it
the pins go in.
*Problems with the electronic load governor at the company's powerhouse-
Problems with the load control governor during the summer of 2017, We were
having issues with cycles and voltage in the generator house, those problems
could be corrected by replacing the voltage regulator on the generator and/or
adjusting the load control governor parameters. Since the voltage regulator
was getting old I decided to have a generator repair company from Boise
come up and replace the voltage regulator, after they replaced the regulator
the problem continued to exist and slowly got worse. At this time Dave Gill
was living in Central America, I contacted him and asked him if he could help
us. I said I would pay his way back to the US and pay him a fair price for
coming. He came back to Atlanta, Dave started to adjust the perimeters of the
computer in the governor control box. I was putting the roof on my log cabin
and I asked in between adjustments if he wanted to help on the roof, so he
continued to adjust the computer but the generator continued to drift the
cycles and would not sync into 60 cycles. The cycles and voltage were either
too low or too high. We decided that the diesel generator was putting out the
correct voltage and cycles in town so the problem must be in the 100 year old
lines between the dam and town. We decided the problem had to be in that I
Yz mile stretch of line from town to the dam. At this point the hydro was so
bad we had to use mostly diesel at about $101000 per month. So that piece of
Iine had to be replaced. I decided we had to buy a better line truck, Atlanta
Power had no money for this, we found one at an auction and purchased it in
Sioux Falls, South Dakota for $24,500 + $21500 in travel expenses. I drove to
Sioux Falls to pick it up and drove it back to Atlanta. This truck is excellent
for Atlanta. Next, I bought $251000 worth of poles, cross arms, acer and
miscellaneous hardware, $521000 of my own money. So while we are talking
about all the things that Atlanta Power and Israel Ray are not doing, the
oldest line we had was from the dam to town. Some of these poles had 3 stubs
and this line was over 100 years old. Its failure would isolate the whole town
from the dam. So, we spent approx. 2 months rebuilding the lines, it is all now
class 1, the poles I bought were western red cedar and treated, they should
last forever. They are 40 foot poles. Getting back to the problems at the dam.
We hired a computer specialist to come in from Boise, him and Dave worked
to find the problem. After a while he told Dave "The problem was in the
powerhouse room but not in the governor". So Dave considered that
statement and he started looking around, he opened up the panel on the
generator where the voltage regulator was we had not considered that there
would be any issues because it was replaced brand new but Dave opened it up
and all3 of the adjustments were on zero. The idiot that came and replaced
the voltage regulator didn't adjust any of the 3 legs. Dave adjusted the 3 legs
and within minutes the governor picked up the load and balanced it perfectly.
Needless to say, this drained both Atlanta Power and took much of my cash,
we still owed for diesel, we owed many things but on the positive side the
problem was corrected, the system now had a brand new line to town, the
governor and generator were performing perfectly we just had to catch up on
our bills which was not easy, we spent about the next year making things
work.
These repairs were done in August/September. This corrected all known
issues but some people were still blaming Atlanta Power and mysetf. By
December Mary Drake had filed a complaint with the PUC in regards to low
voltage (that occurred during the summer) and she had complained about
problems in town, however these problems had long been resolved. Maybe
she didn't know they had been resolved.
Looking back, we should have written this letter to the PUC immediately
because Marys formal complaint we had taken care of in the summer, this
demonstrates that we were not failing to maintain the system. I did way more
than I should have done by purchasing the line truck and power lines, so at
this point we were struggling to pay our bills. It knocked me to my knees, I
struggled to pull Atlanta Power and my own finances out over the next year
but we were able to.
There are many instances where I paid bills for Atlanta Power with my personal
finances. After Lynn was murdered on September 3'd, 2003, his sisters and !
continued to operate the company. Lynn Stevenson and his heirs had a lein on
the assets of the company and this lein was for around/above $80,000 plus
interest. They retained Holly Troxel, Aftorneys at Law. They wanted to settle
the debt and had no interest in continuing our relationship. They made it clear
that if I didn't want to settle we would be back in court once again. We
negotiated for a considerable period of time and we finally agreed on $106,000
for them to walk away from Atlanta. I personally paid Stevensons estate this
amount. Backing up further, to when the dam failures were occurring, Lynn
Stevenson and ! were in litigation because at that point there were moneys
owed which at that point the note was in the 5130,000 range. Lynn was trying
to take the assets of the corporation. We ended up settling that by Stevenson
and I agreeing to each have 50% ownership of Atlanta Power, before that Lynn
had28% and I had to pay him S1S,OOO in cash for a total of 565,000 in value.
This should not have been my personal bill. We had gone through two failures
of the dam, we just had to go on. At that point I was President of Atlanta Power
corporation, this litigation and legal fees involved in the two failures of the dam
had amounted to Stg,OOO with Bonner Chasen Walton and Bower, ! paid this. ln
1985, I paid S1OO,OOO towards the building of the head structures at the dam,
the 60 inch 250 foot pipe, allthe cement, allthe repairs to the turban. Over the
life of Atlanta Power, I have invested S3ZS,OOO of my personal money, over a 37
year period of time. At this point, I am trying to get back 5365,000. lf you take
into consideration inflation and the value of money over time I would say
conservatively that I am receiving less than half of my total investment back.
The offer from the co-op for 5300,000 is wrong and inaccurate in so many ways
but none the less, if I were not interested in the best avenue for Atlanta Power
to continue, I would probably take the $30O,OOO and run but I know that the
power system being ran by a co-op will have many issues, co-ops always leave
things to other people, they very seldom work. There have also been some
events where members of the co-op have asked Gene and Nick not to assist us,
the latest situation was during negative 10 below zero weather, the generator
was not performing correctly. We had caterpillar come and do a 53,000 repair
which included a new voltage regulator. The generator was load tested and was
performing correctly but the next time we needed to use the generator, we put
it online and found that one of the phases was not working, we needed to figure
out which phase was not working. Nick Johnes has a high voltage tester to test
these legs, Atlanta Power has one but in the last couple years, no one knows
where it's at, it's a 51,000 instrument, does anyone know where its at? We
asked Nick if he would come up and help us with this problem. Nick stated that
someone had asked him not to help at Atlanta anymore. I was so angry that at
that point when I was informed of that, I was shaking. I could not control it. This
action would endanger the health and safety of the people of Atlanta. At this
point, Gene Haught and Nick Johnes came to me and asked me if they could
help me run the company and eventually I decided that since I own the
company and the company is basically debt free that ! could sell Atlanta Power
to Gene and Nick because they indicated they did not want to continue working
with members of the co-op. They offered me 5365,000 over 15 years atSYo
interest. Atlanta Power has to have a good lineman and we need
Gene who is a resident of Attanta and also the Fire Chief, to maintain and
improve the system. By accepting this offer, I am once again financing Atlanta
Power for 15 more years to try to get my money out of it. When I am finally
paid off, I will have to live to be 78 years old to receive the last payment. This
would allow the PUC to continue to regulate the utility and although we have
had differences of opinions over the years I am sure that the people of Atlanta
in the long run will think it's best to have the PUC helping to figure out the best
rates and any other matters of fairness for the town.