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.

Senate Bill 269 - Does MJMEUC need to be audited by the state? Do birds need wings to fly?

The ink was barely dry on Senator 'Doc' Brown's (R) certificate of election when he filed a bill to require the Missouri State Auditor's office to audit MJMEUC-MoPEP (They call themselves "Mudge-Muck". Isn't that just too cute) every two years as other state agencies, counties and miscellaneous governmental units are audited by the state.

When you're running the only “joint municipal utility commission” in the state comprised of a consortium of 35 public municipalities which has racked up over $2 BILLION in debt in just five years by using the utility revenues of those little towns as collateral to invest in high-risk coal-fired power plants like Prairie State that irresponsibly and secretly doubled their construction costs from $2.4 billion to $5.5 billion, it's a little hard to make a convincing argument that you should be the only agency in the state exempt from all public accountability.

Senate Bill 269 will make sure “Mudge-Muck” and its minions and affiliates are audited every two years by the state auditor. The results of that audit will be reported to each of the member MoPEP towns as well as the state government to determine, “whether the member governments are legally obligated or have otherwise assumed the obligation to finance the deficits of, or provide financial support to, the joint commission; or whether the member governments are obligated for the debt of the joint commission and if so the extent of that current debt. The auditor shall report in detail the extent of the assets and liabilities of any investments or other business joint ventures of the joint municipal utility commission and report how it impacts the liens upon the assets of each municipality so that these joint venture liabilities and obligations may be correctly reflected in the annual audits of each municipal member of the joint municipal utility commission.”  This is information the board of MJMEUC has never provided to it's municipal members. It should be a shock to most of them when they see the first report.

SB269 is now in the Governmental Accountability Committee. You may keep track of its progress and read the summary or the whole bill in this link.

Naturally, Duncan Kincheloe, CEO of MJMEUC-MoPEP would prefer that his activities not be subjected to public scrutiny and most particularly not by the state auditor. MJMEUC was the first "Joint Municipal Utility Commission Act" in 2002 which is in RSMo Chapter 393 sections 393.700 through 393.770. As a consortium of unregulated municipal utilities (technically a "body public and corporate") Mudge-Muck has all the powers of a municipality - which is a great deal of power - including the power to tax and condemn land, but the statutes in RSMo 393 Kincheloe wrote with the help of his law firm Gilmore & Bell, contained none of the restraints or accountability of a municipality. Unlimited power is the objective of all dictators but it is an anathema to democratic government. The first step to reigning in MJMEUC’s unlimited power and making it accountable to the people is to provide for the state to audit their books.

AND MORE TRANSPARENCY.......In addition, in SB 269 there is also a provision requiring that there be an advertised public hearing and a public referencum vote before any third or fourth class city can participate in a joint municipal utility commission. There should be more than just a majority vote of a few guys on the city council on what someone claims is a "routine power contract" before they can sell their towns down the river to a consortium that will hold them in hock for a share of billions in debt.....literally forever.

It is hard to imagine how anyone in Jefferson City would vote against reigning in the kind of unbridled power Kincheloe and his cronies have created for themselves in an environment where the citizens and rate-payers are completely vulnerable and have no protection from the PSC but you can be sure there will be some. Keep an eye on your own Senator and Representative and see how they react to this legislation. 

What does Mudge-Muck have to do with SB50, the atomic plant financing scam? The Chief Mudge-Mucker Kincheloe is now heavily embroiled in the joint corporate effort to get SB50 passed which will allow all the utility companies including the rural co-ops and Duncan and his Mudge-Muckers to tax us in advance for the billions it takes for them to build atomic utility plants. We-the-People of Missouri flat turned this underhanded financing scheme down a couple of years ago in a statewide referendum but they've found a loophole and are pretending they’re only going to tax us to pay for their “permit” which just happens to be the same price as building their whole atomic plant.  

The privately-owned power companies and the electric co-ops have taken a page from Kincheloe’s book. Because the legitimate banks won’t fund high-risk atomic utility plants (or high-risk coal-fired power plants), that are a hell of a lot more high risk since the earth quakes in Japan blew up three atomic power plants, the power industry must turn the ignorant and unsuspecting public into their personal bankers to finance these toxic projects that the banking community won’t touch.  

Turning the public into your private bank is the same thing the Mudge-Muckers did when they created MoPEP and signed up little unregulated towns to be their collateral cows so they could issue revenue bonds and buy into coal-fired power plants no matter how much CO2 and other deadly toxins they emit.
If your project is so financially shaky that smart banking people won’t finance it what you do is change the laws so the public has to give you the money and they have to take all the risk. Now all they have to do is convince us their atomic plants are safe and their radioactive waste won’t spill out during earthquakes and contaminate us. That’s going to be much harder to do now than it was before March 11^th.

OWENSVILLE, the Little Town That Could…and did

 MoPEPers can almost say goodbye to the City of Owensville. After three years Owensville has one foot out the MoPEP door but hold the standing ovation. In the Land of Kincheloe things can always go wrong especially for escapees from his “Mich-Muck” collateral farm. However, years of stubborn effort based on a promise made to the citizens of Owensville by some Owensville officials, aldermen John Kamler, Rob Borgmann, Ron Miller, current Mayor Dixon Somerville and current city manager John Tracy (and despite opposition from Brian Epstein and the former mayor and city manager) their hard work is finally paying off in an agreement voted for unanimously in March by both the MJMEUC board and the MoPEP committee to free Owensville from MoPEP bondage in June of this year.

Kinchloe is withholding his final approval with the excuse that the credit rating firms must bless the swap which proves two things, the only vote that counts is Kincheloe’s and the MoPEP members are - as I have said from the beginning - first and foremost “collateral cows” securing billions in high-risk highly leveraged debt.

The unanimous votes of both the MoPEP and MJMEUC boards have already sealed the deal to let the newly incoming City of Waynesville swap places with the City of Owensville in addition to “other goods and considerations.” If Kincheloe tries to back out now a lawsuit is a certainty and he will lose…for a certainty. The full details of this divorce will probably be a secret even though MJMEUC-MoPEP is a consortium of public municipalities and they are supposed to both individually and collectively, obey the Sunshine law and disclose such agreements.

Owensville owes a great debt to Waynesville Mayor Cliff Hammock -a man of his word - and the city council of Waynesville. They did not cower and back down on the deal as so many others have when faced with Kincheloe's wrath after he found out the two mayors had met at an MML meeting and made a gentleman's agreement to swap without asking his highness for permission. It was a done deal before Kinchloe found out.

The road map to freedom. If Kincheloe insists on imposing the Cone of Silence on the details of the Owensville deal, any other city looking for a way out of MoPEP (and there are several watching this closely) only has to read their MoPEP contract and then read the MPUA-MoPEP minutes of February 7, 2007, the minutes of February 13, 2008 and March 13, 2008, (the final vote by both MJMEUC and MoPEP) where MJMEUC-MoPEP’s own attorney Randy Irey from Gilmore and Bell explained that, “the MoPEP contract prevents this document (the MoPEP Policy & Process Regarding Assignments under consideration at that meeting) from being a binding policy. To amend this MoPEP contract and establish a binding policy would require many steps including an 85% approval from cities, plus financial consent from the rating agencies.” No one present seemed to understand, or if they understood they didn’t mind, that they were participating in a documentary and policy farce to hassle a fellow member city.

From the mouth of their own attorney you have the bald-faced confession that the Assignment Policy they voted on containing all the hoops Kincheloe made Owensville jump through for over three years (including the bogus claim that Owensville had to pay millions in “stranded costs” which in the end Kincheloe couldn’t prove were anything but a figment of his imagination) were nothing but smoke and mirrors. The upshot of all that is that no matter what Kincheloe demands in the way of money and other “goods and considerations” for a town to get out of MoPEP it’s all just bluff and his own attorney said so.

As attorney Irey said, to make the policy legally binding it would have to legally become a part of the MoPEP contract which would require taking the original contract back to all 35 member city councils (not the stooge votes of the MoPEP committee) for another vote in public to amend the original MoPEP contract to add the new Assignments policy, something Kincheloe doesn’t dare attempt.

To do that would potentially open 35 cans of worms of other amendments and changes that the, hopefully, some now wiser cities would want included or deleted from the contract such as deleting the “direct costs, without limitation” clause where Duncan gets to pipeline every debt, cost and expense he can run up through to his MoPEP members for them to pay along with their power bills. No wonder there was no incentive to keep construction costs down on the Prairie State plant. 

Perhaps they would want to amend the MoPEP contract to put an ending date on it instead of being chained to MoPEP for all eternity. Perhaps they would like an amendment to be able to give MJMEUC the same 60 days notice to terminate that MJMEUC can give them instead of the five years it takes now or perhaps they would like to delete the clause that says they will still owe “Mich-Muck” all the debts incurred during their years of servitude for decades even after they leave the organization.

If your city government can’t figure it out your city attorney should be able to immediately see this big hole in the MoPEP contract, unless of course you still have the same city attorney that said it was a great idea to sign the MoPEP contract in the first place.

What will Owensville do next? Being forward thinkers and way ahead of the pack they are already planning their next moves for the city. Some of their plans are covered in the following articles by Dave Marner, editor of the Gasconade County Republican the only newspaper in the state to cover MoPEP meetings. He is now the go-to journalist for eyewitness accounts on how this drama has played out over the last three plus years. A float trip and a few beers will get you a much more colorful version of events and things that happened that weren't all fit to print in a family newspaper. 

Here are some of the news stories of Owensville, Missouri, The Little Town That Could and how they did.

Lebanon approved for MoPEP membership; Owensville to seek ‘assignment’ agreement

Wednesday, 02 September 2009 04:26 Dave Marner

COLUMBIA- Missouri Public Energy Pool members voted Thursday to admit Lebanon in as a new member and clarified financial fees should that city's elected officials choose to join. MoPEP members also established Dec. 1 as the date by which Lebanon must agree to join using the "standard contract." A motion approved by members set a $10,000 fee per megawatt hour (MWh) a city requesting membership must pay to join. A MoPEP official, Eve Lissik, assistant general manager, called that figure "reasonable" as the group attempts to build up reserves as requested by their auditor.

With a projected 55 MWh peak usage per year, Lebanon’s entry fee to join could reach $550,000. Richard Shockley, the city’s public works director, said officials there had not yet voted to join MoPEP but needed to find an alternative energy supplier before large rate increase take effect next April. “They didn’t want us. They basically said so with their rates,” said Shockley about their current provider. Their annual contract expires April 1, 2010. Duncan Kincheloe, general manager and chief executive officer, said the  $10,000 fee per MWh was to build reserves and could be considered a “conceptual issue” and was similar to Ava’s membership.
Shockley said his city wants “ownership in power purchasing” and seeks a contract period of three years or longer. 

Kincheloe’s report to the pool noted Lebanon was being recommended for membership and service beginning next April “without reservation, but that the MoPEP Committee reserve the option to approve a membership assignment agreement between Owensville and Lebanon before Lebanon takes service through the Pool if the cities present a document with terms mutually agreeable to the two municipals.” 

Bringing Lebanon into the pool, noted Grotzinger, a MoPEP staffer who servers as executive director for engineering and operations, would provide an “avenue for surplus electric distribution.” 

His comment would appear to nullify MoPEP officials’ concerns about “stranded cost” and “stranded power” issues affecting Owensville’s efforts to exit the pool. Grotzinger added that this was an “advantage regarding Lebanon coming in.” 

With a suggestion from the floor, Chad Davis, from Trenton, Mo., who chairs the operations committee, agreed the Contract Committee should review Lebanon’s request and see if they would make a good assignment to take Owensville’s place. Kincheloe said he didn’t “feel the Contract Committee would have much to say — all contracts are the same. Still, Davis reiterated his suggested that the committee review these requests and the members expressed agreement.  (MORE about how Lebanon was admitted but yet another swap promised to Owensville was sabotaged)

Frustration mounts in city’s ongoing attempt to exit MoPEP

Wednesday, 01 December 2010 09:32 Dave Marner

COLUMBIA — Owensville’s next step in its MoPEP exit strategy may be a legal one…playing the game with continuously moving goalposts certainly is not working.

Owensville officials met Monday with MoPEP rate and contract committee members seeking answers to three specific questions. “We made our case and it appears we didn’t get a direct answer again,” said City Administrator John Tracy.  “We requested a vote and evidently didn’t get a vote.”

Duncan Kincheloe, general manager for MPUA, revealed few details about the majority of a 2-hour, 20-minute closed joint session of the Committee on MoPEP Contract Matters and MoPEP Services and Rates Committee. “It was a closed meeting,” said Kincheloe. “There was an opportunity to further the discussion. There was feedback.”

Kincheloe confirmed there were no votes taken when asked if Owensville received it’s thumbs “up or down” vote as requested on three proposals presented by Mayor Dixon Somerville in an Oct. 22 letter to Kincheloe.

“I’m not sure what was expected. They got some response to questions they posed,” said Kincheloe. He called the discussion “beneficial to all” and added “the discussion moved forward.”

Kincheloe said committee members asked he and his staff to prepare a “status report” for the combined MJMEUC and MoPEP meeting on Dec. 9. He added that if Owensville desired any additional meetings over the next few weeks, committee members were willing to “try to accommodate” those requests.

Tracy said members of the joint committees meeting Monday requested additional documents related to an offer to buy the city’s power transmission system from a publicly-traded electric generator and supplier. “That’s none of their damned business,” said Tracy noting the offer has yet to be made public. “It’s not going to happen.” (More)

 

MJMEUC CEO promises new meeting by Dec. 20; MoPEP chair notes ‘willingness’ to resolve issues

Wednesday, 15 December 2010 09:16 Dave Marner

COLUMBIA — Duncan Kincheloe used nine lines of type in his Dec. 9 general manager’s report to theMoPEP membership to congratulate staff members for getting married and hired, to make a “progress” report on another’s pregnancy, and update them on the pending retirement of a southwestern Missouri city’s utility manager.
He spent seven lines stating Owensville officials met Nov. 29 in Columbia with members of subcommittees dealing with rates and contract. None of those seven lines provided MoPEP members with information about what Owensville officials actually requested, and did not receive (a vote on three specified proposals relating to the city’s exit strategy from the pool).

So on Thursday before the full MoPEP membership, when Owensville City Administrator John Tracy delivered a prepared motion asking that their MoPEP assignment issues be resolved, it is no wonder the membership looked on in stunned silence for several moments.

“I’ve got one little thing,” said Tracy noting the city appreciated the efforts of the subcommittees and Kincheloe meeting with the city on Nov. 29.

“One of the big issue that seems to be popping up —stranded cost,” Tracy began. “I think everybody’s wrastled that until it probably can’t be wrastled much more. Hopefully additional meetings will help to solve those issues. With that, at the direction of my Board of Aldermen, I’d like to place a motion on the board, on the floor.”

Tracy read the following motion: “At the direction of the Board of Aldermen of Owensville, I would make the following motion. Motion to approve the city of Owensville assignment to the next city joining MoPEP upon completion of all documents required for an assignment and approval; and that any stranded cost issues be deemed covered from St. James joining MoPEP with a MW load capacity of 15 versus the city of Owensville MW load of 6.4.” The motion was seconded by Jim Grebing of Hermann.

What followed was several seconds of complete silence followed by an audible muttering of questions from around the conference room of the Days Inn Motel in Columbia.

Presented as a request from the Owensville Board of Aldermen, Tracy requested that the next MoPEP member assignment go to Owensville and that the city of to St. James be approved to take over the stranded cost issues the MJMEUC leadership is attempting to place on Owensville. Those stranded cost issues have been discussed but have never been resolved.

Tracy said this week that MJMEUC officials first said Owensville was responsible for up to $19 million in long-term obligations for power contracts obtained on the city’s behalf. That figure was later revised down to $120,000 per year, through 2021, and then later back up to $468,000 per year through the life of the contract. “No one knows what it is,” said Tracy, “or if it even exists.”

Owensville contends it does not since St. James came on board with a utility use more than twice what Owensville is using.

Owensville officials have never signed any long-term power purchasing agreement with Ameren Energy and contend they do not owe stranded costs for future power purchases which continue until 2021.

Chad Davis, from Trenton, Mo., and chairman of the MoPEP Committee and the MJMEUC Committee on MoPEP Contract Matters, noted his “initial reaction” was to “take the motion up for consideration without a doubt.”

Davis restated the motion and asked for a copy of the motion for the record. He noted Owensville had proposed — for the MoPEP members to approve — a motion “to authorize an assignment from Owensville to the next member that joins MoPEP, and, as a substitution for the stranded cost issue, or concern, to earmark St. James as a substitute for that stranded cost issue to make the stranded cost issue go away.”

“Basically,” said Tracy.

Davis then handed off the microphone Kincheloe, seated three seats to his right.

Tracy’s motion obviously came as a surprise to Kincheloe as he stumbled through a rambling explanation of what must happen next and how additional meetings would be needed to help Owensville resolve its stated intention to exit the pool.(More)

Waynesville inks letter of intent to join MoPEP as Owensville’s assignment city

Wednesday, 02 March 2011 09:19 Dave Marner

Owensville officials have received a letter of intent from the city of Waynesville to take Owensville’s assignment that should pave the way for an exit from the Missouri Public Energy Pool (MoPEP).

Should is the imperative word as approval must still be granted from the combined Missouri Joint Municipal Electric Utility Commission’s Bard of Directors (MJMEUC) and the MoPEP member cities. A letter of intent was what Owensville officials were told, by MJMEUC directors, that they needed before the city’s exit strategy from MoPEP could continue.  

The city received that letter of intent, signed Feb. 17 by Waynesville Mayor Cliff Hammock, said Owensville Mayor Dixon Somerville on Monday. Waynesville’s City Council authorized their mayor to sign the letter on a 7-1 vote during their meeting on Thursday night, according to Bruce Harrill, Waynesville’s city administrator.

“We showed the City Council the letter of intent and discussed it in some detail and the City Council approved the mayor signing the letter of intent for Owensville,” said Harrill who has been with Waynesville for the past six years. “We’re moving forward in good faith with the city (of Owensville) to take up their position with a MoPEP contract.”

Harrill said Waynesville officials are seeking a long-term power supply contract before their contract with Sho-Me expires in April 2013. Waynesville has a peak demand of around 13 megawatts with a normal load of around 8 MW. Owensville’s load is 6.4 MW at peak demand, according to a recent MoPEP Exhibit M which listed members’ usage.

Somerville and the city’s attorney, Leland B. Curtis of Curtis, Heinz, Garret & O’Keefe, P.C., met Thursday for an hour in Columbia with Duncan Kincheloe, manager and CEO of the Missouri Public Utility Alliance (MPUA) where they delivered the signed letter of intent. Curtis’ partner Kevin O’Keefe joined in on the meeting via a telephone conference call.

“That was what you’d call a Kodak moment,” said Somerville. “It was a total shock (to Kincheloe). He was not expecting that.” 

Somerville said Kincheloe called Waynesville’s administrator, Harrill, to confirm that the city’ council and mayor understood what they were agreeing to do.  (More)
(It was more than a Kodak moment it was a “Gotcha” of major proportions for Kincheloe. After lying and stringing Owensville along and arbitrarily turning down one swap after another for no reason at all, he had been trapped!)

MoPEP members approve proposed Waynesville/Owensville transfer agreement

Thursday, 10 March 2011 17:41 Dave Marner
COLUMBIA — Without opposition Thursday at their quarterly meeting in Columbia, Mo., MoPEP membercity representatives voted to allow Waynesville to replace Owensville in the electric consortium and instructed MP UA staff to complete a “prompt review” to facilitate the assignment and transfer agreement between the two cities.

“The formal transfer agreement, which is yet to be finalized, is subject to final approval by the boards of both cities and by the MJMEUC (Missouri Joint Municipal Electric Utility Commission) Board of Directors and its MoPEP (Missouri Public Energy Pool) Committee,” noted a press release issued Thursday by Missouri Public Utility Alliance General Manager and CEO Duncan Kincheloe. “The boards of aldermen in both municipalities have already approved the agreement in principal.

Kincheloe noted “the terms for transfer described by Owensville leaders would lead to him to recommend MJMEUC approval if a review of Waynesville’s utility system indicates it is suitable for MoPEP participation.”

Owensville Mayor Dixon Somerville and City Administrator John Tracy were scheduled to meet Friday afternoon in Waynesville with city officials there and Kincheloe to begin finalizing the transfer and assignment agreement between the two cities. Waynesville is currently a member of the Municipal Gas Commission of Missouri, described by Kincheloe as a “sister agency” of MJMEUC, which deals with providing natural gas to member cities.

In recent Owensville Board of Aldermen meetings, it became apparent the city would be required to address certain financial concerns presented by MJMEUC officials during discussions on the city’s exit strategy. Three of the city’s four aldermen discussed the issue in closed session Monday and authorized Tracy and Somerville to offer a $100,000 cash payment and four of the six city-owned generators, valued at $600,000, to facilitate the transfer. The fourth aldermen, Ron Miller, was on a business trip and was unable to attend the March 7 city meeting. He was briefed on the proposal and also agreed to the offer made by the city, according to Tracy.

The transmission equipment includes the two oldest generators and the two skid-mounted generators in the utility building. The city’s two trailer-based units outdoors are collateralized through a lease-purchase agreement for their purchase and are not part of the deal. The city will not be responsible for fees to remove the generators from the building.

Owensville will need to have an election question on the November ballot asking for voter approval to the sell of the city’s electric transmission system and generation capabilities. The proposal approved March 10 in Columbia includes the stipulation that the city would purchase power from MJMEUC until after the first of next year. Should voters approve the sale of the generation system, Tracy said it would be at least February of 2012 before Public Service Commission approval was granted to the buyer of the system. After PSC approval is granted, city electric customers would become customers of the new electric supplier, a publicly traded corporation.

The transfer agreement between the city and Waynesville with MJMEUC/MoPEP is expected to be finalized when the member cities meet again on June 9.

Owensville will be required to pay for a review required by MJMEUC bond counsel “to secure necessary rating agency letters assuring that the proposed Owensville/Waynesville transfer will not impair MJMEUC credit ratings,” noted the motion to approve the application for transfer proposal.”

The motion was made by Jim Roach of Jackson, Mo., and seconded by Rolla’s Rodney Bourne. (link)

MoPEP approves proposed ‘assignment’ transfer agreement between Owensville, Waynesville

Wednesday, 16 March 2011 08:51 Dave Marner

COLUMBIA — Without opposition Thursday at their quarterly meeting in Columbia, Mo., MoPEP member city representatives voted to allow Waynesville to replace Owensville in the electric consortium and instructed MPUA staff to complete a “prompt review” to facilitate the assignment and transfer agreement between the two cities.

 

Owensville Mayor Dixon Somerville, City Administrator John Tracy, and Leland Curtis, the city’s attorney, met for two hours Friday afternoon in Waynesville with their mayor, administrator, and president of their utility board. “Waynesville’s ready to get it done,” said Tracy.

Tracy said Curtis and Waynesville’s legal counsel were preparing the legal documents for the transfer agreement to submit it to MoPEP for a required credit rating report by bond counsel for MJMEUC.

Tracy said Waynesville officials “know the urgency” of the proposed transfer and noted they want to act quickly to take advantage of a $64,000 credit against their application fee which is currently $10,000 per megawatt of power. Owensville, as a MoPEP member, paid in that $64,000 during a period last year where a $12.5 million reserve fund was being built up between the member cities.

Tracy said Waynesville officials were scheduled to meet again April 5 and expressed the desire to have the agreement finalized between the two cities by that meeting. Somerville said that Waynesville officials also told the Owensville contingency they wished to sign the agreement on the same date as Owensville does.

As the March 10 concurrent meeting of the Missouri Joint Municipal Electric Commission’s Board of Directors (MJMEUC) and the Missouri Public Energy Pool No. 1 Committee (MoPEP) began at the Days Inn motel banquet room, Duncan Kincheloe, general manager and CEO of the Missouri Association of Municipal Utilities (MAMU), called for Somerville and Tracy and talked to them away from the meeting tables. There he talked in hushed tones and handed each a draft of a press release announcing the proposed transfer agreement. (more details on how the two mayors struck the deal at the Feb. MML meeting....)

How is the City of Hermann like a chicken-killing dog?

Ed. Note: The following is an abridged version, with permission of No Standing News editor Robert W. Nash of Rolla, of an NSN editorial that appeared in November explaining how the class-action lawsuit, Arbor Investment v. City of Hermann came about and what impact a decision against the City or Hermann may have on all the unregulated municipalities in the state who have for decades indulged in inflating their utility rates so they can skim off the ‘profits’ to use for non utility purposes ranging from budget deficits to plain old political pork. This is NSN’s story….

How long are you going to let chicken-killing dogs stink up your place?   

Arbor Investment v. City of Hermann, the first of three class-action cases filed on this issue, will be argued before the Missouri Supreme Court in December and a decision is expected in spring of 2011. How the cases came about and how they will affect the three towns being sued is a fascinating story.  The decision, if it goes against the City of Hermann, could end decades of the corrupt “pump and skim” practice in hundreds of Missouri towns where utility rates are not controlled by the PSC. It would allow citizens to finally vote on utility rate increases as the Hancock Amendment intended. It could also touch off a tidal wave of municipal lawsuits. Which way it will go and whether all the rate payers who have been paying these “hidden taxes” all these years will benefit from a decision favorable to rate payers in this lawsuit, depends on several things. Read on…

What does the Hermann Hancock lawsuit mean?

The Attorney General and the State Auditor have filed amicus briefs to support the plaintiffs in a class action lawsuit Arbor Investment vs. City of Hermann which is now case # 91109 on the docket of the Missouri Supreme Court. Attorney General Koster said in his Oct. 28, 2010 press release that he was filing an amicus brief in the case for the plaintiffs because: “The law says Missouri taxpayers have the right to say when they want their taxes increased and increasing user fees for that purpose clearly is in breach of the law.”  State Auditor Montee said essentially the same thing but made a particular example of the recent Marceline audit and listed other cities where similar findings have been made.

If the City of Hermann loses, and I say the odds are they will, it means there will be a new “landmark” case from the Missouri Supreme Court telling all the unregulated towns that they must quit taking money from their utility funds to fill holes in the city budgets that they were too incompetent to balance. Some few will do it willingly but most we expect will have to have a gun held to their heads. Why do we say the odds are that the City of Hermann will lose? It’s unusual for the AG to take sides in one of these cases and unheard of for the State Auditor to join him. When two ambitious politicians, the Attorney General and the State Auditor both take sides on an issue it means they’re pretty sure who the winners and losers are going to be. 

Must reading-the primary sources: This link will take you to the SC’s docket page link with links to each of the most current briefs being presented to the Supreme Court. The brief by the Armstrong Teasdale firm on behalf of Arbor Investment et. al. is, in the editor’s opinion, very lucid and describes the issues well. The defense brief by the City of Hermann sounds sweaty and desperate. For laughs read the feeble amicus brief filed by MPUA - the mother ship of MJMEUC-MoPEP. Their argument is that the “utility customers consent to the city providing them utilities and are free to discontinue their use of the city’s services.” Oh sure they can, but only if they want to live without heat and light, and without bathing, cooking, flushing and all the other MONOPOLY city services. A typical MJMEUC opinion.

Deep down in their tiny lizard hearts these municipal lobby organizations MML and MPUA-MJMEUC) and their lawyers know that the jig’s up and sooner or later their clients are going to have to quit using their utility fees as “hidden taxes” and start submitting rate increases to the voters they just want it to be as ‘later’ as possible. In MJMEUC case, if their unregulated MoPEP members have to get the public’s consent to utility rate increases it would damage their credit rating. They’ve promised the holders of their over $2 Billion in revenue bonds that their credit strength is the (MoPEP) "participants' willingness and ability to increase rates and maintain financial metrics to support MJMEUC's debt."  They’ve got $2 Billion riding on this decision.

The City Audits that exposed the racket: No one knows how many towns are playing this skim game but it has been going on since WWII. My money says it’s not the dozen or so the auditor has uncovered but more likely there are well over a hundred or even two hundred corrupt unregulated towns in this state. In the last few years, petition audits by the State Auditor of the towns of Springfield, in 2007, Salem in 2010, Rolla in 1989 (their second state audit was 2009), Marceline in 2010 (also their second state audit), and Hermann in 2004, and, as the auditor points out in the above press releases, state petition audits of several other Missouri towns such as, Farmington, Lebanon, La Plata and others going back many years, have produced repeated condemnation from state auditors of both political parties for what they called “hidden taxation” or the practice of skimming inflated utility rates. But, like an addict loves his needle, city officials loved their secret pork machine so they flat refused to give it up even after the state auditor pulled their pants down in public. For the ethically feeble, continuing the crooked practice was easier and more rewarding than exercising the tough fiscal discipline often promised in their election campaigns.

The Lawsuits: This case started in 2006, when citizens in Hermann, Missouri represented by the firm of Armstrong Teasdale LLP, 7700 Forsyth Blvd., St. Louis, Missouri, filed a class action lawsuit against the city. In 2010, Armstrong Teasdale, finding the same conditions existed in other towns filed similar class action lawsuits on behalf of more clients in the towns of Marceline and Salem. Each lawsuit alleges basically the same violation of Sec. 22 of the Missouri Hancock Amendment to the Missouri Constitution. The three complaints charge that each of the three cities have over-charged their local utility citizen-customers by millions of dollars annually then skimmed off the ill-gotten utility ‘profits’ and used the cash to subsidize city deficits and/or fund other non-utility projects. James E. Mello of the Armstrong Teasdale firm is the lead attorney for all three suits. 

The Briefs: The oldest of the three lawsuits is the one against the City of Hermann, which was first filed in the Gasconade County Circuit Court in 2006. On Tuesday, September 21, 2010, this class action suit was accepted by the Missouri Supreme Court for transfer, which means it has been placed directly on the Supreme Court docket without the case going back to the Gasconade County circuit court on remand as the Missouri Court of Appeals ordered in their June 2010 decision. The link to the Hermann Application for Transfer is a summary of the case and contains the questions the Supreme Court is being asked to decide.  The class action suits against the cities of Salem and Marceline by citizens of those towns which raise the same questions were filed early in 2010 but have not yet been heard in their respective circuit courts. Marceline’s is the most entertaining read. The redundancy of the filings in three cities so far can be read as resolve on the part of the Armstrong Teasdale law firm to end this decades-long municipal corruption which is practiced in dozens if not hundreds of unregulated towns in this state - not just to stop the practice in the three towns being sued.

In addition to the allegation that the cities were inflating various utility fees and skimming off the excess ‘profit’ for non-utility purposes it is also alleged that they raised these utility rates without a vote of the citizens as required by the 1980 Hancock Amendment. Pumping up utility rates and skimming off the surplus for non utility uses is a popular and common practice among cities with home-owned and unregulated electric utility departments that are unprotected by the Missouri PSC. In the three lawsuits the “utilities” at issue are not just electric power but also water, sewer, natural gas, trash and communications. Although the most egregious violations are usually in electric utility rates - the greatest revenues naturally produce the greatest abuses - all utilities offered by a city for what is now called a “fee” have been abused and will be affected by this ruling.

Among the more bald-faced practitioners of this “pump ‘n skim,” scam, the utility rake-off is dumped into the general fund and spent as part of the general city budget. Among the more nervous it’s politely called “interdepartmental loans” which moves money from the lucrative utility fund to other funds (permitted by law temporarily) but the ‘loans’ are never repaid (not permitted by law). The excess utility ‘profits’ are never rebated to the utility customers and rate increases are never voted on by the public and there lies the heart of the legal question.

The Appellate “Toast” order. In their June 2010 ruling on the Hermann case the Eastern District Appellate Court gave the City of Hermann and the lower court this parting shot:

“In conclusion, we find the trial court erred in entering summary judgment in favor of the City because there is a genuine dispute of material fact as to whether and for what purpose the City increased utility fees in violation of the Hancock Amendment by setting charges at a level to increase the City’s general revenue and to subsidize general government expenditures rather than to compensate for the provision of services. Therefore, the judgment of the trial court is reversed and remanded.

If it is shown on remand that the object of the fees is to fund the City’s general revenue, then this constitutes a violation of the Hancock Amendment and deserves an appropriate remedy under the Hancock Amendment.” – 6-10 Mo. E. Dist. Court of Appeals, Arbor Investment Co…..

Translation: “You have one chance to prove that for decades you haven’t deliberately pumped up city utility fees and skimmed off the resulting ‘profits’ to benefit the city budget thereby using your monopoly captives as “hidden tax cash cows” and that said cow did, in fact, jump over the moon. If you can’t prove this, you’re toast.”

Of course the City of Hermann denies that they ever intentionally inflated utility rates so they could skim off the excess revenues for non-utility uses. They say it was just an accident which happened with uncanny regularity month after month, year after year, decade after decade. All the corrupt cities like Rolla who steal their utility funds this way tell the same lie. Any lingering question about the City of Hermann’s intent was blasted sky high at the 9/29/10 Hermann city council meeting when Hermann’s Alderman Penning blurted out, “We had an election in the 50s in this town to go into the electrical business to make money to run the city….It was done specifically to make money to run the city.” It’s fair to say that Alderman Penning doesn’t have a firm grip on the defense strategy in their case.
 

Marceline refuses rescue offer. Some of these towns are so thick they still don’t get it and Marceline leads this pack of Stupids. Not only are they soaking their citizens with the highest utility rate in the state (15¢ per kWh, but Rolla is closing in on the rail with 10.3¢ per kWh) but they’re also running their town almost entirely out of their utility fund which is municipal hari-kari if the Hermann decision and/or their own later class action lawsuit goes against them. How will they cut back their city budget by 62% in one year? 

The Marceline Malefactors have refused a settlement offer made by James Mello of Armstrong Teasdale, LLC on behalf of the three Marceline plaintiffs who are suing the city. As part of the settlement the plaintiffs would drop the lawsuit and Mello and the firm would arrange bridge financing and other financial assistance while the Marceline Malefactors figure out how to run a town without sucking the utilities dry and exploiting its citizens with the highest utility rates in the Midwest. The law firm would charge a substantial fee for this remedial class in city government but the reprobates in City Hall really can’t expect the law firm to provide the means of a massive bail-out and teach them how to govern for nothing. The firm’s fees for this service would be high but probably less than the cost of the inevitable court-ordered bankruptcy and the long-term economic damage such headlines would cause which is their almost certain fate right now. In exchange, the city would have to quit ripping-off its citizens but that, it seems, was too high a price to pay. (In the infamous Jefferson County Alabama Ch. 9 bankruptcy a federal judge appointed a lawyer to be the court-appointed receiver at $500 per hour but the judge cautioned him not to bill the county for more than 10 hours per day!) 

The stiff-necked Marceline city government flat refused the offer because to accept it and stop milking their citizens would be to publicly admit their guilt and they absolutely refuse to do that even though they’ve twice been caught by the state auditor with both hands and feet in the cookie jar. Instead, they asked citizens to volunteer to serve on a finance committee. Marcelanians may not be the brightest but they weren’t that stupid. There were no volunteers.

At the November 2nd Marceline city council meeting, Mayor Stuart, city manager Liz Cupp and the Council came up with their second most wonderfulist idea ever (the first being the idea to fund 62% of the whole city budget out of their 15-cent per kilowatt utility rate). They made plans to put a referendum on the April 2011 ballot asking the citizens of Marceline to vote on whether they would like to have the Council to continue to transfer money from the electrical fund and continue “business as usual!” The sheer idiocy of it takes your breath away doesn’t it? These people are afflicted with the same brain disease as Herman’s Alderman Penning. They actually think a local referendum will absolve them of compliance with what they fear will be the outcome of the Hermann case before the Missouri Supreme Court and subsequently their own case. 

These people are beyond saving. They’re like having a chicken-killing hound. He may be your favorite hunting dog but when he begins killing your chickens there are only two choices, cure him or shoot him. The only way to cure him is to take a chicken he’s killed and a stout piece of rope and tie that chicken on his back and leave it there until it rots and falls off and he stinks so bad the other dogs can’t stand him and he even looks ashamed and can’t stand himself. If that doesn’t cure him you just have to shoot him. The problem is you have to live with the stinking dog while you’re trying to cure him of killing your chickens. Marceline’s city government never was a good hunting dog to begin with. The dead rotting chicken has been stinking a long time and they’re still killing chickens. It’s time to just shoot them with a mass recall election.

What will it CO$T if Hermann, Marceline and Salem lose?

In each of the three lawsuits the plaintiffs are asking for “damages, declaratory judgment and injunctive relief.” If the Supreme Court finds the skimming practice to be an illegal “hidden tax,” that automatically makes it a violation of the Hancock law, so the plaintiffs ask that they be immediately stopped from doing it and they ask that the excessive utility charges which were transferred from one or more utility funds to other funds for up to six preceding years be refunded to their utility customers. Presumably, if the current utility rate is illegal it could be ordered rolled back to the last voted legal rate which may have been years ago or to 1980. That would require immediate action by the city to hold a public referendum to try to restore the kilowatt or water or trash rate to its current illegal level. All these “ifs” are up to the court. 

The plaintiffs in each city are asking the utility rebate to the rate payers from the alleged illegal transfers for the years 2005 to 2009 in Marceline which transfers would total $3,335,220. In Salem the total is $4,700,000, in Hermann the rebates would be a total of $5,255,052 because they were skimming from six different utility accounts. In addition to refunding some of their ill-gotten gains the cities may have to pay some or all of the legal fees and costs of the plaintiffs.

The Supreme Court can do all of the above or none or something else entirely but the very least that will happen if they find this practice has been illegal is that the city of Hermann (Salem and Marceline in their turn) will be ordered to cease this practice and the people will be relieved of a gross injustice and henceforth be able to vote on utility rate increases as they should have been doing since 1980. If that happens, the deceitful anti-Hancock cities will have sudden large holes in their budgets and will have to learn how to run their cities without a subsidy from the utility fund. Is that a bad thing? They would also have to learn how to make a convincing case to the voting public when they honestly need a rate increase. That’s accountability.

The budget shortfall in Hermann would be about 35% just for the annual utility skim which is bad enough but in Marceline over 62% of their annual city budget is skimmed from the utility fund. And here is the mother of all ironies – if they’re ordered to pay back the millions they’ve taken from inflating and skimming the utility accounts they’d have to do it WITHOUT being able to use the money from inflating and skimming their utility accounts!

What will happen to all other guilty unregulated towns?

If the Supreme Court’s decision goes against the city, any unregulated Missouri city guilty of the same practice that does not likewise voluntarily roll back utility rates and take other prudent remedial measures will be wide-open to an easy-to-win lawsuit by any local ratepayer and his $300-per-hour-plus-expenses lawyer. Unlike the remedial offer made to Marceline, other lawyers can just use the precedent, file a lawsuit, collect an out-of-court cash settlement with little or no judicial fuss and walk away leaving the city to continue to milk their electric cow. This can happen over and over and with a confidentially agreement to keep it all secret you’ll never know who city hall is paying off or for how much but you will be paying the settlements out of your utility bills.

The “Hermann decision” will not be self-enforcing

but more like a Do-It-Yourself-Kit

If the Supreme Court decision in Arbor vs. City of Hermann is that cities may not fund non utility activities out of their utility account and must get voter approval of appropriate fee increases, it doesn’t mean every city council in the state that is guilty of doing the same thing Hermann has been doing will automatically stop their illegal practices. Human nature being what it is – intractable - and city council’s being what they are – dense – many or maybe most will go right ahead and continue to do the same thing they have been doing for decades, victimizing their fellow citizens while making up whining excuses why their reason for doing it is different and justified unless they see chain gangs of city councilmen in perp walks on TV - which they won’t. 

So don’t sit back and wait for the hound dogs to stop killing your chickens because it won’t happen. There will be no thunderbolt to strike them dead for you - mores the pity. God only helps those who get off their fat asses and file class-action suits. What the Hermann case does mean is that local citizens may have a great new precedent or almost a do-it-yourself-kit with which to file their own class action suit and a fairly easy time winning it. “Attach lawyer A to the new Landmark Hermann Case B and insert nozzle into…”

If the past is a predictor of the future, and it usually is, citizens in all the little unregulated towns in Missouri who are paying gawd-awful utility prices had better be thinking about doing what the citizens in Hermann, Marceline and Salem have done which is calling up the lawyers at Armstrong Teasdale or some other law firm and offering to be one of the names on a class action lawsuit against their City of Really-High-Utility-Rates-With-No-Votes.  Initiating a class-action lawsuit shouldn’t cost the plaintiffs (that would be you) much except maybe for some filing fees and it’s the only way people (that would be you too) are ever going to get their utility, sewer and water rates down to something reasonable and competitive and have the privilege of voting on all future utility increases that qualify for a Hancock Amendment vote (also you).

The Hancock Amendment, or the power to vote on some utility rate increases is, for those rural cities who have been left naked without PSC protection for the last 71 years, our rather crude substitute for the Public Service Commission protection we have been entitled to but haven’t had since 1939. We pay state taxes so city people can have PSC protection but we don’t get PSC protection because we live in unregulated municipalities. So Hancock law solution is not perfect but it’s all we’ve got and for three decades they’ve even robbed us of that. 

Armstrong Teasdale is the law firm representing the plaintiffs in the Arbor Investment Co vs. City of Hermann. I say hire the cook with the most experience because beginners are going to have a long and expensive learning curve but shoot, pick any lawyer you like.   

The point is that State Auditors have been telling citizens for decades that City Hall was robbing us with “hidden taxes” but nobody knew how to make them stop it without paying a fortune for a private public service lawsuit and none of the local lawyers had the guts to sue them anyway. Even after state petition audits of local governments pulled down their panties they’ve continued to do it every day since. Now there are these guys at this big law firm who obviously know what they’re doing and have laid out the whole road map and it sure looks like they’re going to pull it off. The people in Hermann, Marceline and Salem who had the guts to stand up and sue over something that was so obviously corrupt are going for it because they’ve had enough of being victimized by their own elected city officials.

It’s probably the last chance you’ll ever have so the question is this, how long are you going to put up with letting these chicken-killing dogs hang around your yard stinking up the place?    

Armstrong Teasdale LLP,

James E. Mello                                  Jeff McPherson

Phone:  314-621-5070                         Phone: 314-552-6610

Direct Phone: 314-342-4154
Fax:  314-621-5065 
 jmello@armstrongteasdale.com