Tuesday, June 14, 2011

IT’S DONE! OWENSVILLE IS FREE OF MOPEPers and MUDGE-MUCKERS!

Parts of this report are from the Gasconade County Republican by editor Dave Marner the only reporter in the state who has ever attended “Mudge-Muck” (MJMEUC) MoPEP meetings which are always held in virtual secrecy in a galaxy far, far away from the thousands of electric customers who pay whatever power bills “Mudge-Muck” and its satellite MoPEP slap on them “without limitation.”

 

Signed MoPEP exit documents delivered

Wednesday, 08 June 2011 08:19 Dave Marner 

Owensville’s assignment agreement with Waynesville and a temporary power purchase agreement were hand delivered Tuesday to Missouri Joint Municipal Utility Commission (MJMEUC) officials in Columbia.

Owensville aldermen unanimously approved two ordinances by roll call vote. The first, No. 1983, authorized Mayor Dixon Somerville to sign the assignment agreement with Waynesville. 

Waynesville’s mayor signed their agreement May 13. Somerville drove to Columbia to deliver the paperwork. A final vote on Owensville’s exit is expected when the full MoPEP board and membership meets at 9 a.m. Thursday for its quarterly meeting in Columbia.


“I’ll happily introduce that,” said Ward 2 Alderman John Kamler. “I didn’t think we’d ever get to that point.”

Ordinance No. 1084 authorized the mayor to sign an agreement to buy power through March 1, 2012, from MJMEUC and the Missouri Public Energy Pool (MoPEP). The agreement includes Owensville’s conditions for exiting the pool including a $100,000 cash payment by June 27. The city will also allow MoPEP to take possession of, and remove at MoPEP’s cost, the city’s two indoor Caterpillar generators and the two indoor Fairbanks Morse units. These stipulations will satisfy the pool’s concerns over potential stranded costs associated with power commitments made on the city’s behalf until 2021.


The city will also be required to post a $400,000 line of credit to guarantee all power payments until March 2012 which are due 10 days after monthly billing periods. Ward 2 Alderman John Kamler was opposed to the switch from 15 days as originally discussed but changed to 10 days by MJMEUC in the final agreement.

“I don’t feel it to be a big stumbling block,” said City Administrator John Tracy. “Make sure we get it out the door.”


He stressed the city could not afford another delay of 90 days or more which would prohibit the city from placing a ballot issue before voters in November to sell the generation system and utility accounts to AmerenMissouri.  #

So, The Little Town That Could – has…
….and they did it without paying the millions in so-called “stranded costs” that Kincheloe invented and demanded early in the negotiations. They did it without giving the five-year notice demanded in the outrageous MoPEP contract and they did it without complying with any of the other phony roadblocks Duncan Kincheloe tried to throw up to keep them in his perpetual MoPEP collateral prison.

One thing that was proven during the two years of frustration that Owensville went through was that Duncan Kincheloe is not a man of his word. Repeatedly he agreed to let Owensville swap with another town about to join MoPEP and then went back on his word – or told the board members of MJMEUC to back out. The nine board members of MJMEUC are Duncan’s tools and have never gone against his “advice.”

What will Owensville do without their annual utility “graft?”
Actually, Owensville’s new city government and administrator took “the pledge” and quit stealing money from their utility fund when they took over the city some time ago and realized what was going on and what bad financial shape the city was in. They’ve also been paying off some old bond debts that previous administrations left lying around unpaid and slowly the Owensville aldermen, mayor and administrator are (hold on to your hat) getting the town into good financial condition and even beginning to put some money away into its reserve fund! (pass the oxygen!). If that keeps up Owensville may be one of the few towns in Missouri that can actually balance its budget and build a reserve fund! Is it possible that good government pays off?

Now that they’ve got “Mudge-Muck” off their backs the city council, mayor and city administrator are ready to hold the public referendum required by law to ask citizens for permission to sell the city-owned utilities. If they get that permission they have already negotiated a preliminary deal to sell the whole thing.

The economics of the deal is that by NOT having the capital costs, overhead, liability, maintainance and especially the headaches etc. of owning and operating their own utility, and by just collecting a big fat franchise check from a big fat power company every year, they can invest that money in their other city infrastructure and be money ahead. Some of that franchise money can legitimately be invested in recruiting new businesses. The economics works because the basic assumption here is that they are honest officials running an honest city and not raising utility rates and using them as “hidden taxes” while lying to the public about what the utility increase was for.

The TRUTH, what a novel recruiting tool! Now the city of Owensville can offer a competitive electric rate to new businesses in their industrial park both to the businesses and to the workers in those businesses. This will be a great recruiting tool as they can show prospective companies what other dishonest towns are really doing with their utility “rate” increases. Who wants to locate their business in a town where the government colludes in wholesale corrupt practices like the utility pump and skim scheme? If they won’t stick at lying about what they’re really doing with the “utility” rate increase, what else are they lying about? A city skimming off a high and corrupt utility rate can always make a secret cheap “deal” to recruit a business but where will the business get workers if the cost of living in the area has a base of 11-cents to 15-cents per kWh power for them and the workers can’t afford to live there?

The big question consultants never ask. Cities often have so-called expert consultants come in and do studies about what contracts to sign with which power companies like MoPEP or rate studies and the like but the powerful and the most important question city government never has them ask is, “Would we be better off financially if - using an honest markup - we just sold the city utilities, bought our power direct, and took an annual franchise fee?”  

With most city councils in the Midwest deliberately inflating utility rates and skimming the “profits” to pass the pork around city hall the honest answer would be a resounding “YES!” but would you get an honest answer in a dishonest town? Consultants usually answer questions the way that please the guys who write their checks.

How Owensville did it - the Key to the Exit. For the towns that have been waiting to see if escape is possible, Owensville not only got out amazingly cheaply but Kincheloe wound up with four diesel generators that he or someone will have to pay more than the generators are worth to retrofit to meet EPA emission regs.How did that happen? Well, for the full inside story you'll have to talk to the guys from Owensville. Go back to the Wednesday, April 6, 2011 MoPEP Machine blog, "Owensville, the Little Town That Could...and did," for details about how the Mayor of Waynesville - a man of his word - and the Waynesville city council stuck to their guns and made Kinchloe play fair about the swap with Owensville - for a change. If they hadn't Kinchloe would have pulled another bait and switch on Owensville for no good reason just like he did the previous four or five aborted swaps.

Kinchloe's nine "Mudge-Mucker" puppets, MJMEUC board members, sat through two years of the Three Card Monte game Kincheloe played with the City of Owensville all the time pretending they didn't know what he was doing. They could have taken the one single uncomplicated vote called for in Article XXII of the MoPEP contract and put a stop to his power game at any time and let Owensville out but they didn't have the guts to do it.Even when Owensville demanded they take that vote required in the MoPEP contract they flat refused to do it. Instead, they cowered until they heard their Masters voice tell them they could finally vote. that's just pathetic.
 
Because Owensville is the first “Mudge-Muck” escapee their efforts took about two years and involved a lot of frustrating blind alleys and they had to knock down a lot of phony issues set up by Kincheloe and his staff. The first time new ground is broken it is always the hardest and takes the longest. The towns that come behind should have an easier time if they’re smart enough to learn from Owensville.

One of the big traps to avoid. There is an alleged MoPEP policy called the “Statement of Considerations in Assignment of a Members Interest” 3/7/07 also referred to as the “Assignment and Assumption Policy” that is supposed to govern the swap and exit process. The policy was invented by Kincheloe and his staff so the squishy subjective verbiage in the policy is designed to suit him in harassing any town attempting to leave which is why Owensville had so much trouble with it until they finally ignored it, made a back room deal with Waynesville and demanded an up or down vote from the "Mudge-Mucker" board.

The MoPEP members voted on this so-called Assignment and Assumption policy in 2007 when Owensville complained that Kincheloe was making up contract swap or assignment rules and breaking them at his whim. The MoPEP members take this policy seriously because they passed it in good faith thinking they were helping but MJMEUC’s own lawyers know the policy is a complete fraud and one of them, Randy Irey of the Gilmore & Bell law firm, told them so during a discussion of the so-called Assignment and Assumption policy on February 7, 2008. Their own minutes of that meeting report that Irey explained why the policy is not a binding document:
 
 “Committee members had previously received copies of O’Gara’s document, (the Assignment policy) comments made by committee members, and Gilmore & Bell’s recommendations. Randy Irey explained that the MoPEP contract prevents this document from being a binding policy. To amend the MoPEP contract and establish a binding policy would require many steps including 85% approval from cities, plus financial consent from the rating agencies.”

There you have it right from the horses’ mouth. Gilmore & Bell is the bunch that invented the MoPEP contract so who would know better than Randy the lawyer who actually wrote it. His name is right on the first page of the MoPEP contract. The Assignment policy is meaningless and non binding unless they go back to all the member city councils that signed the original MoPEP contract and have them vote on a new MoPEP contract with this Assignment and Assumption added as amendment but if they did that they’re opening up a whole can of worms because during that process all kinds of other amendments can be proposed by all the members especially the disgruntled ones that have caught on to the trap they’re caught in. Opening up the MoPEP contract for any amendment is Kinchloe’s worst nightmare.

So, if you’re itching to get out of MoPEP don’t forget there really is no binding rule about leaving MoPEP except the one in the MoPEP contract in which your city in its abject ignorance signed which in Art. XXII Successors and Assigns leaves it up to the MJMEUC board to simply take a vote and let the contract be assigned with the written consent of the MJMEUC board but it doesn’t say there is one single thing you have to do to get their written consent. They could do it even if Duncan turns red in the face, screams, and drums his heels on the floor, but would they ever dare?

After all Kincheloe’s only the hired hand. Why should they be intimidated by him? After all he’s the genius who thought it was a brilliant business scheme for all of them to buy diesel generators (financed by MAMU his PayDay Loan company) to create a “generator farm,” to make your own power so you could sell the excess to others at a profit. Cool idea huh? All they had to do was fill the generators with expensive diesel fuel, turn them on and out came electricity that costs five times the going retail rate for electricity. Brilliant!

Now that all the MoPEP nitwits are making payments on diesel generators (and Rolla has 17 or more of them so that makes Rolla the Teachers Pet) now they get to pay $70,000 each to get them retrofitted to meet EPA emission standards. Anyone who could read government notices knew years ago those diesel emission regulations were eventually going to be enforced so why didn’t Kincheloe know it? Yeah Ole Kincheloe is a business genius all right.

At any rate Owensville can heave a big sigh of relief that it won't be around to pay all those higher prices MoPEP members were told are coming when the super-expensive-cost-twice-as-many-billions-as-estimated Prairie State plant goes on line. On February 23, 2011, the Gasconade County Republican reported this story from a MoPEP meeting. 

“MoPEP cities told to expect higher energy costs by 2013; any new members would not be ‘associated with MoPEP’

 COLUMBIA — Utility managers and administrators of MoPEP member cities were told Thursday to expect higher energy costs due to anticipated “shifts between energy costs and generating capacity.”

“This shift will affect you differently, said Duncan Kincheloe, manager and CEO of the Missouri Joint Municipal Electric Utility Commission (MJMEUC — pronounced “Mudge-Muck”) to members of the Missouri Public Energy Pool (MoPEP) committee meeting Feb. 16 in Columbia. “This trend will continue through 2013.”


Kincheloe said that will be the first full year MoPEP member cities will be experiencing the “all-in-costs” and “full capacity costs which includes Prairie State.”


That coincides with a report issued late in 2010 from bond rating agencies which reviewed MJMEUC’s massive $250 million issuance of construction bonds in October for its portion of the Prairie State project in southern Illinois. Since 2007, MoPEP has issued $850 million in long-term bond obligations for power plant construction projects. Funding was also approved in 2010 for participation in the final stage of the Iatan II power plant construction project near Kansas City, Mo.


Translation…the debt load which MoPEP members have been repeatedly told isn’t actually a debt (until they attempt to leave the pool) begins to look like actual debt now that bond payments for construction of the Prairie State Energy Campus and the Iatan II project begin coming due in 2013 and beyond.”  (More)

Aren't Kinchloe and his minions always telling the sucker towns they're recruiting that if they join MoPEP their prices will "stabilize?" Well see that was true. MoPEP prices are going to stabilize. It's just that they will "stabilize" at a much higher rate as soon as the super-expensive-cost-twice-as-many-billions-as-estimated-Prairie State and Iatan II plants go on line. 

Owensville did get out just in the nick of time.