CAPE GIRARDEAU — Close to 250 customers in the Hillcrest Manor subdivision will have to pay utility rate hikes of $25 to $150 per
month after a ruling was upheld by the Missouri Western District Court of Appeals.
In 2015, the Missouri Public Service Commission made it possible for Hillcrest Utility Operating Co. to increase its rates since the company's infrastructure was crumbling. To
fix the problem, Hillcrest secured $1.2 million in financing to repair its aging
last time Hillcrest Manor residents had seen a rate increase was 1989, but the
equipment Hillcrest Utility Operating bought from Brandco Investments in 2015 was failing.
On Sept. 15, 2015, Hillcrest
Utility Operating filed a letter with the Missouri Public Service Commission, asking for an increase to its operating revenues to cover the cost.
The company held a plethora of meetings to settle unresolved differences.
"A consensus was
eventually reached between Staff and Hillcrest as to some of the issues, and
the two jointly filed a Partial Agreement setting out the resolved issues while
simultaneously setting aside the remaining issues for resolution at an
evidentiary hearing before the Commission," court documents stated.
Another meeting was held in May
19, 2016, in attempt to settle the two sides’
The primary obstacle in the
appeal was the cost of the debt component. Hillcrest
Utility Operating president Josiah Cox said
in court documents that he met with more than 50 investors and
commercial bankers in an attempt to secure funding for repairs.
Cox said the only financing to be
secured was with Fresh Start Ventures at a 14 percent interest rate. Hillcrest
Utility Operating told
the commission that the interest rate should be used to determine its proposed rate of
The Public Service Commission
staff, meanwhile, disagreed, suggesting a rate between 8.88 percent and 10.13 percent.
During the hearing, the company was granted its 14 percent rate.
At the appeals hearing, the office of public counsel's appeal argued the commission should
have followed its staff's recommendation and assigned Hillcrest a lower cost of
the appeals court's opinion, though, it sided with Hillcrest
Utility Operating, saying
that "the commission did not presume the 14 percent cost of debt to be
appropriate but rather determined it was appropriate based on the evidence
presented at the evidentiary hearing."
appeals court also ruled that Cox’s testimony convinced the commission
the company's interest rate was the best it could obtain despite
diligent efforts to find "cheaper, more traditional financing."
So what’s next? No one is really sure if there
is any recourse for the residents of Hillcrest Manor.