MPUA's CEO writes letter to clarify role in Campbell utility supply debate

Following claims by Campbell, Mo., Mayor Raymond Gunter that the Missouri Joint Municipal Electric Utility Commission (MJMEUC) was taking advantage of the utility situation in Campbell, Duncan Kincheloe, general manager and CEO of the Missouri Public Utility Alliance (MPUA), recently rebutted Gunter's claims through a written letter.

MPUA is the umbrella name for MJMEUC, the Missouri Association of Municipal Utilities and the Municipal Gas Commission of Missouri.

In a recent letter provided to the Daily Dunklin Democrat, Gunter claims that after the City of Campbell decided to seek a buyer for its utility company, "MJMEUC decided to take advantage of the opportunity to mark up the price of the power they sell us by about 20 percent over the old price."

In the rebuttal letter, Kincheloe says, "In accordance with our short-term supply agreement, MJMEUC is fully prepared to promptly terminate service to Campbell. We will have no hesitation whatsoever in doing so whenever the City gives the notice provided for in the agreement, which may be as little as 15-days before the end of any month.

"As you would expect, MJMEUC cannot provide electricity on these flexible terms as inexpensively as it provides power to customers that have made long-term commitments. If Campbell can obtain suitable short-term electric supply at lower cost from some other supplier we encourage the City to make those arrangements. I realize that long-term trends for most other suppliers point to higher costs while MJMEUC's costs are declining, but the City is certainly free to re-examine its arrangements and plans.

"For the time being, MJMEUC will try to continue making service available on current terms if desired by the City, but additional financial security may become necessary, particularly if power markets appear likely to become more expensive. Additionally, because current service arrangements utilize transmission surpluses that will not be available next summer we do not expect to be able to provide service after May 31, 2010. I trust that your new long-term arrangements will be in place by that time."

The Daily Dunklin Democrat recently contacted Kincheloe to discuss the details of why the letter was sent out.

"Some of my staff had come across and had forwarded to me copies of earlier reports from (the Daily Dunklin Democrat) and I just wanted to clarify for the record, the circumstances and nature of the contract," Kincheloe said. "I was concerned about whether there was an accurate understanding of the circumstances or not, so I just wanted to lay them out.

"I didn't want to leave the impression, because we are a not-for-profit organization, that we were somehow trying to take advantage of the situation [at Campbell]. In case there was any uncertainty out there, I didn't want to have additional references made in the future to what our role is without at least offering up what our view of it was."

Regarding the termination notice, Kincheloe said either the City of Campbell or MJMEUC can give the notice to end utility supplies to the city.

"They can give us notice or we can give them notice to terminate [service] at the end of any month, as long as 15-days are provided," Kincheloe said.

When asked if there was any reason MJMEUC would terminate service to Campbell, Kincheloe said, "We have a transmission contract. In order to get power to a place you got to have electricity and you got to have a way to get it there. Right now, we have a transmission service, that is a way to get it there, that is reserved for a certain amount of capacity on the transmission line and it is reserved for a certain period."

Kincheloe said MJMEUC is going to run into a shortage of the capacity at the at the end of May 2010.

"One of the complications is that during the past year, we have taken on the city of Thayer down in South-central Missouri as an additional city that we are supplying now and basically, because of the long-term contract with Thayer, if we go beyond May [with Campbell], we would have to go out and contract for some additional transmission service in order to continue serving Campbell," Kincheloe said. "We can't contract for that on a 30-day basis so we would have to incur costs or commit the costs on a more long-term basis for transmission service associated with that service to Campbell beyond the end of May.

"I suppose if Campbell couldn't make other arrangements or didn't want to for some reason and wanted us to continue to serve, then we probably would be coming to the city saying that we need them to put up the money up front for us to take on that long-term transmission cost. Otherwise, we wouldn't be able to wrap it in and bill them on that kind of short-term notice situation. We couldn't be in a situation where they might provide notice and we would be left with stranded costs for the transmission."

When asked if there could come a time that the City of Campbell could be without power, Kincheloe said he does not see that being an issue.

"Between the co-ops and us and the city, I'm sure that we will do whatever is necessary to figure something out to make sure that nobody goes without power," Kincheloe said.

Attempts to contact Campbell Mayor Raymond Gunter in response to Kincheloe's letter were unsuccessful.

The Daily Dunklin Democrat will continue to monitor the utility situation at Campbell and report and new developments.