Electrical rate bill tries to evade Missouri Public Service Commission

Kansas City Power & Light and other electric utilities are promoting Missouri Senate Bill 564 as legislation that is desperately needed for electric consumers. This bill would do nothing for the grid. It’s all about the greed.

Let’s quickly examine the facts of the bill:

▪ SB564 removes discretion from the Missouri Public Service Commission to make important decisions about utility rates. The commission is the only consumer protection against monopolies. This bill adopts rate-making mechanisms that would greatly benefit utilities with even higher profits. All classes of customers would experience much higher electric rates.

▪ The commission has previously rejected rate-making mechanisms in this bill, such as surcharged increases in transmission costs, tracked property taxes and cybersecurity costs. So while a utility is earning more than its authorized profit, these trackers treat the utility as if it was actually earning less than authorized. Then they pass the tracked increases on to future ratepayers — pretty tricky.

▪ The legislation would adopt another rate-making mechanism — also previously rejected by the commission — known as “plant-in-service-accounting.” Its supposed purpose is to eliminate regulatory lag, the most significant financial incentive a monopoly utility has to curb its costs. The commission previously rejected Ameren’s request for this, referring to it as “a solution in search of a problem.”

▪ Proponents of SB564 argue that the bill’s rate increase “caps” would benefit consumers by limiting average annual rate increases to no more than 3 percent. The truth is that the bill does not include any rate increase caps. There are merely rate increase milestones, above which utilities could still collect inflated rates. The only consequence would be a penalty, which would be much less than the money they would bring in from customers.

▪ The rate increase milestones for large industrial customers are different in that the other customers must, for five years, subsidize the industrials by paying even greater rate increases in order to hold those large entities’ increases to 2 percent. Ameren’s last approved rate increase was 3.5 percent, which averaged 1.75 percent per year.

In summary, SB564 would raise everyone’s electrical rates, but would increase small and average customers’ bills the most.

Dozens of lobbyists are well paid to represent the monopoly utilities, but legislators are elected to represent their constituents.

This is nothing more than the fox managing the chicken house. It’s just another attempt to diminish the oversight of the Missouri Public Service Commission.

This story was originally published January 23, 2018 at 8:30 PM with the headline "Electrical rate bill tries to evade Missouri Public Service Commission."