The MoPEP Machine: Dec 5, 2007

Wednesday, December 5, 2007

MoPEP, the "ill-disgused display of bureaucratic avarice"

Missouri Supreme Court Justice Holstein once characterized the excessive fees charged by the board of an ambulance district as “an ill-disguised display of bureaucratic avarice.” Compared to the gluttony of MoPEP, the greed of that ambulance district pales by comparison.

Check all the following statements that apply. 1.___You live in a small rural town in Missouri. 2.___Your town owns its own utility department. For decades they bought wholesale power from Ameren UE or KCP&L or another big PSC regulated power company. Your board of aldermen, city council or utility board (different organizational methods, same thing) marked it up and sold it to you. 3.___ Within the last seven years your city aldermen or council signed a contract electric with MoPEP #1 because they promised to give better power prices through “economies of scale.” 4.___On or before 2005, your town council hastily signed something called “The Restated and Amended MoPEP contract” and you didn’t even notice. 5.___Since 2005-‘06 your price per kWh has shot up by 45%-71% or more and you have new charges to pay like “service availability fees” and electric meter fees you didn’t have before. 6.___Outraged citizens have demanded city officials 'do something' but all they got was that deer-in-the-headlights stare. 7.___Your city officials keep repeating the excuses of MJMEUC’s CEO Duncan Kincheloe, “It’s because of industry deregulation” or “MoPEP projections call for continued increases until 2009 when prices should stabilize,” or “In a few years other rates will be as high as ours.” You’re beginning to realize they have absolutely no idea what’s going on and they just want you to shut up and go away. 8.___In frustration you’ve resorted to writing nasty things on your electric bills. 9.___Your city officials have asked a PSC regulated electric company and/or the regional Associated Electric Co-op about contracting with them and that’s when they found out for the first time that they can’t get out of their MoPEP contract without a five-year notice and huge financial penalties. 10.___The towns around you are still buying power from the PSC regulated commercial companies or a co-op for the price you used to pay. Your friends who live in those towns are really rubbing it in. 11.___You’re looking for a house to buy out of town.

If you checked more than 8 of the above, welcome to the World of MoPEP, and the “ill-disguised display of bureaucratic avarice."

Here’s a tip. If your town hasn’t already bought a few million dollars worth of diesel generators to join MoPEP’s “generator farm” count your blessings and at all costs stop them from doing it. This failed business plan, a.k.a. The MoPEP modified Ponzi Scheme, is a story you won’t believe.

Watch this blog for news on MJMEUC's swelling investment portfolio and newspaper reports on the struggles of MoPEP member towns as they try to cope with their artificially inflated local utility rates and realize they are locked into MoPEP's perpetual, cost-plus contract. Our Google News Alert picks up news articles on MoPEP and MJMEUC but your local paper may not have an on-line version so Google will miss it. This is the place to pass along those articles.

Glossary

"Joint Municipal Utility Commission Act." RSMo Chapter 393.700 – 393.770. The laws that turned MJMEUC/MoPEP contracts loose on the unsuspecting public in 2002. They were subsequently amended until in 2007 they - and the MoPEP contract they spawned - became truly lethal. Thanks to our state legislators for paying no attention to what they were voting on and what it was really doing to our ‘naked’ small towns and their monopoly detainees that are denied PSC protection.
MJMEUC debts: MJMEUC debts and MoPEP debts are the same because MJMEUC and MoPEP are the same. Of the 60 MJMEUC members only 35 have also signed the MoPEP contract - the rest must have read it first. The remaining 25 MJMEUC members that were smart enough to NOT sign the MoPEP power contract probably think they aren’t part of the mega billion investment mess and that their cities are not liable for the MJMEUC debt. Are they ever going to be surprised!
MoPEP contract: (the “Amended and Restated Missouri Public Energy Pool #1 Agreement Among Missouri Joint Municipal Utility Commission and Pool Members”) One of the worst Trojan contracts of the 21st century. It is not, as represented by MJMEUC officials, a routine industry-standard commodity contract to provide allegedly cheaper or “stable” power due to MoPEP’s alleged “economies of scale,” it is actually a device to feudalize small towns and turn them into a “collateral farm” so MJMEUC can, without the knowledge or consent of these electrical serfs, pledge their collective electric revenues to leverage MJMEUC’s first $10 million bank loan into $2-plus Billion in revenue bond debt. The $2-plus Billion in revenue bonds was used to purchase equity ownership in five power plants being built in the Midwest. Equity investments are illegal for all Missouri political entities.
MoPEP No 1 captives: Albany * Ava * Bethany * Butler * (Campbell escaped!) Carrollton * Chillicothe * El Dorado * Springs * Farmington * Fayette * Fredericktown * Gallatin * Harrisonville * Hermann * Higginsville * Jackson * Lamar * LaPlata * Lebanon * Macon * Marshall * Memphis * Monroe City * Odessa * Owensville * Palmyra * Rock Port * Rolla * Salisbury * Shelbina * St. James * Stanberry * Thayer * Trenton * Unionville * Vandalia. (35 as of 10/10)
MoPEP: The Missouri Public Energy Pool #1 is merely a “project” of MJMEUC, not a separate corporate entity. MoPEP is a window-dressing committee formed ostensibly to set electric rates. The “project” has even less power than a corporate affiliate or empty shell but the “project” serves to prop up the illusion that the MoPEP member cities have control of their power rates. Utility managers, and city officials or “Pool Members” who take the pro forma votes aren’t aware of their impotence. If they had bothered to read their MoPEP contracts they would have seen that MJMEUC has all the power and all the rights in the contract and MoPEP committee members have nothing but obligations to MJMEUC. Note the chilling designation of #1, signaling that there will be clones of this unnatural thing.
state audit hell: What you’re living in if you’re a city manager or mayor and the State Auditor - in the petition audit forced upon you by angry citizens – publicly yanks your pants down for covering up your financial mismanagement by inflating utility rates and raking off hundreds of thousands or millions of dollars to subsidize your misfeasance. And after all that agony…you still have to pay the audit bill.
“direct costs:” Arguably the most poisonous provision in the MoPEP contract and the key to dumping all MJMEUC’s financial obligations onto MoPEP members along with their power bills. Direct costs are defined on page 3 as: “All costs MJMEUC incurs in connection with acquiring, providing, arranging or financing the provision of Services hereunder, including without limitation all payments MJMEUC is required to make (including reserves and debt service coverages MJMEUC is required to maintain pursuant to any bond indenture, financing lease or loan agreement) under contractual and/or financial commitments and obligations entered into by MJMEUC in order to procure, deliver, or finance resources intended to provide Services, without regard to whether any particular resource is available to or used by any particular Pool Member….” The “without limitation” part on page 3 is where cities should have stopped reading and moved on to discuss relining their sewers.
“going bare:” What you feel you are doing when you live in a rural town in Missouri that has a city utility but unlike the favored Missouri citizens who live in big cities you have no Public Service Commission protection to keep you from being gouged by uncontrolled and unlimited utility rates.
“joint venture:” What State Auditor Susan Montee said in the Rolla and Marceline petition audits about the MJMEUC/MoPEP organization’s debts and liabilities may be “…pursuant to Governmental Accounting Standards Board statements, it appears the relationship between the RMU and the MJMEUC/MoPEP may be a joint venture. Additionally, joint venture participants must disclose specific information including information regarding ongoing financial interest and/or financial responsibility and information to evaluate whether the joint venture is accumulating significant financial resources or causing a financial burden on the participating government in the future.” -Montee, Rolla audit 2009
“Marceline Migraine:” What you get every time you open your electric bill if your city government is too chicken and too lazy to ask voters to raise property or sales taxes to support essential city services but instead they keep playing the “pump ‘n skim” game with electric rates. The Poster City for this is Marceline Missouri that has abused their monopoly hostages until the electric rate is 15.35¢ per kilowatt and 63% of the city budget comes from illegal utility overcharges.
“pump ‘n skim:” What your city government (utility board) does when they contract for power from a commercial wholesale source then pump up the kilowatt price far higher than needed to run the utility department so they can covertly “skim” a few hundred thousand or a few million a year to subsidize their mismanagement in other city operations or fund pork projects for their cronies.