The MoPEP Machine: Oct 17, 2008

Friday, October 17, 2008

Are Palmyra and Shelbina looking for the door?

As clients became restless this summer, Kincheloe had to send out fire teams to stamp out the brush fires of rebellion:

Special Meeting Held Tuesday Morning about Shelbina’s Electrical Rate
By Thad Requet 8-6-08
In a meeting that drew considerable interest and discussion, several Shelbina City leaders met with representatives of the Missouri Public Utility Alliance. The Shelbina City Council, along with Mayor John Smith, City Administrator Chris VanHouten, Shelby County Economic Developer Robert Harrington and several employees and former employees of the Shelbina Electric Department met with John Grotzinger, Executive Director of Engineering and Operations for the Missouri Public Utility Alliance and Dr. Eve Lissik, Director of Energy Services and Assistant to the General Manager of the Missouri Public Utility Alliance.
• A Brief History The purpose of the meeting was to get an overview of the City’s current energy contracts and to find out more about how the process currently works. The Missouri Public Utility Alliance is an umbrella over three different entities. They are the Missouri Association of Municipal Utilities, the Municipal Gas Commission of Missouri and the Missouri Joint Municipal Electric Utility Commission (MJMEUC). The Missouri Public Electric Pool (MoPEP) falls under MJMEUC. MoPEP started with an original group of 19 cities that formed the pool on Jan. 1, 2000. It currently has 32 cities in the energy pool. Cities that are involved with MoPEP have signed 40 year contracts to work through the group. The 40 year deal was signed in 2003, according to Grotzinger. If a city wants out of the agreement it would have to give a five year termination notice and would be responsible for any shortfall that might occur because of the City’s absence. Grotzinger said most likely no short fall would occur but in case there was one due to the City leaving the pool, it would be that city’s responsibility to cover that cost. The bulk of that cost would be in the debt service and financing in the next 30 to 40 years. For the full story, see this week’s issue of the Shelbina Weekly.

BOARD OF PUBLIC WORKS SPECIAL CALLED JOINT WITH CITY COUNCIL
AUGUST 14, 2008
The Palmyra Board of Public Works met in a joint meeting with the city council on the above date in City Hall at 7:00 p.m. with Mayor Loren Graham presiding. The following council members answered roll call: Jeff Merkel, Jim Bross, Gary Coleman and Carolyn Andresen. Councilman Emmett Garner entered the meeting at 8:10 p.m. Board members answering roll call were Ernie Boulware, Jim Church, Bill Huffman and Gary Stuhlman. Also present were Ewell Lawson, Eve Lissik and Duncan Kincheloe from MoPep, Brent Abell, Mark Cheffey.

Mr. Kincheloe presented handouts that showed MoPep information. He explained the MoPep operation, the prospect for the future of MoPep and the options available to the city. According to Mr. Kincheloe, if the city gives a five year notice to leave the pool, they would still be obligated financially for the life of each power plant that is being built. Another option is to find a city that is interested in joining the pool and assign our debt and obligation to them.
Fredericktown is in this process with St. James. Discussion and questions followed. A motion to adjourn was made at 8:50 p.m.

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.