"Milking the Electric Cow"

Before we dig deeper into the MoPEP scam that’s hurting your personal finances and your town, there’s a second big issue that affects electric power prices in our home-owned utility towns, it’s the common but very illegal and corrupt municipal practice of overcharging for utilities so the excess "profits" can be skimmed off to subsidize perpetual deficits in your city’s budgets and other local pork projects they don’t want to tell voters about.

For years, in the many petition audits resulting from petitions circulated in small towns for the state to audit their town for one irate reason or another, the state's auditors have denounced the practice of raising the kilowatt rate charged and then skimming utility “profits” off for political uses as a corrupt practice. The auditor quite rightly calls “hidden taxation.” It is “hidden taxation” and that’s exactly why it’s so popular with city council members, mayors and city administrators. The auditors hired by your city government to perform that token annual ritual known as the "independent city audit" turn a blind eye to this illegal practice because they want to get hired again next year so every year they committ fraud to give your town another "clean" audit even though they know quite well that if there was such a thing as a "clean" audit (and there isn't) yours certainly isn't one. This local audit is also known outside your town as a “sweetheart audit.” True, they are done by CPA’s but…well…let’s say the profit motive frequently overwhelms their professional ethics. Missouri’s CPA’s have developed soft-peddling bad news into an art form.

Prior to 1980, when our elected and appointed officials were short of cash they didn't look around for savings to pay for their little extras, rather they looked around for fees to raise. John Hancock, a rabid Republican from Springfield (does Springfield have any other kind?) stopped that practice, bless his little fiscally responsible heart, with a statewide referendum which became Amendment X Sec. 22. The people we elect and hire to run our cities in these post-Hancock Amendment days have to wear this Hancock hair-shirt and they really, really don't like it because it prevents them from willy-nilly raising most local fees and inventing others unless they have the consent of the voters. They are rightfully leery of trying to get voters to consent to most of the road-kill they call "public benefit projects." Post-Hancock the only thing local elected officials had left to pay for their pork was one last department, the utility department, where the sneaky monkey's could raise cash under the table by raising the price of the kilowatts people burned. Just a fraction of a kilowatt was enough to raise lots of cash. The utility department was an invaluable and secret city resource; a private little pork pot that you never noticed they were siphoning until MoPEP came along in their big clumsy boots kicking over the furniture and attracting all this attention to utility rates

The Rolla on-line newsletter No Standing News, calls the practice of raking off excess utility profits by to cover up city budget deficits, “Milking the Electric Cow.” These excessive rate charges either disappear via an “inter-fund transfer” from the electric department to the city’s general fund or, in Rolla’s case the money is passed out to crony organizations for things excused under that handy catch-all label, “economic development.” Rolla's lame excuse for this corrupt practice was to call this a "fee in lieu of franchise taxes" and -in an ordinance mind you - they explained that it was "in lieu of" the franchise tax the city would have gotten if their citizens hadn't paid off a $45 million G.O. bond issue to buy the utility department from it's previous private owners. In other words, the taxpayer’s punishment for paying off a huge bond issue to buy the utility company was to perpetually make them pay a phony franchise fee to the city!

In 1998, in their first petition audit, State Auditor Margaret Kelly told the City of Rolla and the Rolla Municipal Utility Board (Board of Public Works), “The statutes in Chapter 91, RSMo, cited in the Board of Public Works’ response do not support the board’s assertions. In addition, these statutes do not apply to the city of Rolla. The Board of Public Works’ authority and power is limited to managing municipal utilities. Any expenditures of utility monies for non-utility purposes translates into higher utility rates than necessary to operate and maintain the municipal utilities.”

That’s a much too diplomatic way of saying, “Skimming from artificially inflated utility rates to pass out pork to the city and the utility board’s cronies under the guise of “economic development” is a corrupt practice and all of you should be prosecuted and sent to jail.” Like the rural electric co-ops that rebate the excess revenues accruing from utility rates, cities that own their own utility departments and add a few cents markup to the wholesale rate should rebate any excess to their customers not use it to cover up reckless city spending, pass it secretly to pay for so-called “development projects" the voters didn't approve and don't know they're paying for. You will find a similar statement in the petition audits of Hermann 2003 and Farmington 2006 and other small towns with their own utility departments. As soon as Rolla's next petition audit is completed you will see the same statement in their second petition audit for the second time. That's our State Auditor for you, they are meticulous about documenting lawbreaking, but do nothing to stop it.