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.
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.
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.
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.
“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.
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.
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.
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....)
