Local lawmakers voice concerns over Hillcrest utility rate increase

Two local lawmakers have voiced concerns about the Missouri Public Service Commission’s recent decision to grant a steep rate increase for a small, private utility system that serves nearly 250 customers in the Hillcrest Manor subdivision in Cape Girardeau County.

State Sen. Wayne Wallingford, R-Cape Girardeau, and state Rep. Donna Lichtenegger, R-Jackson, raised questions about the commission’s decision in a letter last week to public-service commissioner Maida Coleman.

The Public Service Commission (PSC), which regulates utilities in the state, approved the rate increase last month by a 4-1 vote.

The state’s Office of Public Counsel, which objected to such a steep increase in water and sewer charges, asked the commissioners to reconsider. But on a 3-1 vote last week (one commissioner was absent), the commission refused to reconsider.

The Office of Public Counsel on Monday appealed the rate ruling to the Missouri Court of Appeals, Western District.

Rep. Donna Lichtenegger

Nacelle Dietrich, staff director for the PSC, said the rate increase is scheduled to take effect this month. The utility company can increase the water and sewer charges as allowed by the commission, even while the appeal is ongoing, she said.

PSC staff will review the lawmakers’ letter and respond to their questions later, Dietrich said.

The rate increase was the first for Hillcrest customers since 1989, commission officials said. But Wallingford and Lichtenegger raised questions about the PSC’s decision to allow monthly utility bills to jump from $25 to $150, on average.

Wallingford said, “I just think it was totally misguided.”

He added, “It is a bad precedent (for future small, utility rate-hike cases).”

The senator said the PSC should have given greater consideration to the burden being placed on Hillcrest property owners.

“To me, the PSC is supposed to watch out for the citizens, consumers. There is no balance if your utility rate goes up 600 percent,” he said.

In the ruling, commissioners voiced concern about the effect steep increases in water and sewer rates would have on Hillcrest customers.

But commissioners said they must set rates that provide a return to the utility that is “reasonably sufficient” for the company to attract capital to meet financial obligations and adequately serve customers.

But Wallingford said the steep rate hikes could be repeated for other small, private utility systems across the state in the coming years.

As a result, the senator suggested lawmakers may need to address the issue in the 2017 legislative session.

”I definitely will take a look at it,” Wallingford said.

Hillcrest Utility Operating Co., owned by Central States Water Resources Inc. of St. Ann, Missouri, requested increases in water and sewer charges after acquiring the utility system in March 2015 and spending more than $1.2 million to repair the failing system.

The commissioners said in their ruling they took into account the fact utility company president Josiah Cox obtained a loan with a 14 percent interest rate to fund the services.

Wallingford and Lichtenegger asked the commission to explain its decision that such a loan was “reasonable.”

The two lawmakers asked, “What is the commission’s rule or guideline on when a small water and sewer loan is simply too costly for ratepayers to bear, and what interest rate would the PSC consider unreasonable?”

The lawmakers also questioned the lending arrangement involving two other officers of the utility company — developers Robert and David Glarner. The two brothers purchased Northwest Plaza, a deteriorated St. Louis area shopping center and sought state tax money for redevelopment, Wallingford and Lichtenegger said.

Wallingford and Lichtenegger wrote they also “have to question the character” of Cox. They said an online search of Missouri court records turned up a breach-of-contract case and delinquent tax cases involving Cox.

Wallingford said Cox’s past financial troubles make him unsuitable to operate the utility system.

“I would never have even let him buy it,” he said.

The lawmakers wrote they also want to know whether all the repairs are completed.

Wallingford said Hillcrest resident Tammy Glueck recently texted him a photo, showing bright green slime running down the street.

Glueck said Tuesday the problem has not been corrected. She said the runoff began several weeks ago near a tank operated by the utility system.

She said the subdivision has been under several boil-water orders this year.

“Nothing has been solved,” she said.

Cox could not be reached for comment Tuesday.

mbliss@semissourian.com

(573) 388-3641

Pertinent address:

Hillcrest Manor subdivision, Route K, Cape Girardeau County, Mo.