Monopoly electric utilities are wrong for Missouri

In recent years, Missouri’s monopoly investor-owned electric utilities have touted the benefits of the Illinois form of electric regulation. The Illinois electric market is characterized by two features:

▪ competition in the electric generation market

▪ incentives for utilities to invest in the distribution grid.

Interestingly, the Missouri utilities were able to convince the General Assembly (by employing more than 40 special interest lobbyists) to enact a portion of the Illinois model (the distribution investment incentive in Missouri Senate Bill 564 of 2018) while ignoring the more important portion of the Illinois model — electric competition.

Recognizing that electric generation competition is the fundamental part of the Illinois model that results in the customer rate reductions, it is unlikely that the benefits experienced in Illinois would ever be realized in Missouri without Senate Joint Resolution 25, calling for deregulation of electric generation, passing and later being voted on by Missourians.

This resolution is very important to the economic well-being of Missouri. Clearly, regulation is not working in the state. Since 2010, Missouri’s average industrial electric rate has increased by over 51%. In contrast, the national average industrial electric rate has only increased by 6.2%.

Over the past 40 years, the state and federal government have repeatedly taken steps to replace regulation with competition. For example, instead of regulating airlines, trucking, trains, telephone, internet, electricity and more, electric, we have allowed the competitive market to set prices for those services with amazing success and innovation.

SB 564 has effectively allowed Ameren to have its cake and eat it too. Specifically, this allowed Ameren to have a distribution investment incentive without having to expose itself to the competition that exists in Illinois. In other words, passage of SB 564 provided Ameren an increased incentive to invest in Missouri, which would cause customer rates to increase, without implementing the portion of the model (electric competition) which is what actually spurs rate reductions. As a result, rates in Missouri are now above the national average and destined to continue to go up.

Worse still, Ameren claimed that SB 564 would be used to modernize our electric grid. That said, in its recent capital investment plan, Ameren revealed that these incentives are being used for all investment and not simply its investment in grid modernization. Specifically, Ameren is spending $1 billion in wind generation.

Given this, the benefits of SB 564 claimed a modernized distribution grid will not be realized in Missouri to the extent touted by Ameren.

Since I came into the Missouri Senate in 2013, Ameren, Kansas City Power and Light Company and Empire Energy have spent millions of dollars and have effectively reduced oversight of the Missouri Public Service Commission (the only watchdog of utility monopoly tyranny). As I have indicated for many years and still believe today, SB 564 was about the greed, and not about the grid. The fox is managing the hen house.

Doug Libla is a member of the Missouri Senate.