Legislation Reflects Consumers’ Call for Rate Caps, Modernizing Missouri’s Energy Grid

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Legislation Reflects Consumers’ Call for Rate Caps, Modernizing Missouri’s Energy Grid

 JEFFERSON CITY – On Dec. 1, State Sen. Ed Emery, R-Lamar, will pre-file energy legislation for the upcoming 2018 Missouri legislative session. The bill is designed to ensure that any future increases in electric rates cannot exceed 3 percent per year on average. This legislation supports bending the cost curve downward for electricity, which will over time save consumers money on their energy bills. At the same time, it unlocks more than $1 billion in grid improvements, attracting business to the state and creating jobs.

Consumer groups including the Missouri Retailers Association, Missouri Grocers Association and the Missouri Chamber of Commerce and Industry agree that something must be done to curb the rising costs of electricity. Earlier this month the Missouri Retailers Association sent Missouri lawmakers a letter urging passage of rate caps to bend the cost curve downward for energy consumers. In its own letter to lawmakers, the Missouri Grocers Association echoed the need for cost stability and predictably with rate caps.

Senator Emery and Rep. T.J. Berry, R-Kearney, who will file similar legislation in the House, said they have been working with various stakeholders this year to come up with a potential compromise to reform Missouri’s 100-year-old energy regulations. The lawmakers believe there is a growing consensus that the status quo is hurting Missouri’s economy and slowing the modernization of our state’s energy grid. On Nov. 30, the Missouri Chamber of Commerce released its 2018 legislative agenda, which was unanimously approved by its Board of Directors, including support for energy regulation reform.

“The Missouri Chamber appreciates this movement towards compromise in solving Missouri’s energy challenges,” said Dan Mehan, Missouri Chamber of Commerce CEO. “The Chamber recognizes the advantage of affordable and reliable energy in retaining and attracting businesses to our state. The Missouri Chamber will support efforts and work with business leaders, utility providers and community leaders to drive a collaborative long-term solution to address Missouri’s aging infrastructure while ensuring continued reliable energy at predictable and competitive rates for customers.”

“When it comes to Missouri energy policy, the status quo just isn’t working for Missouri families and businesses for two primary reasons,” said Sen. Emery. “Energy prices are going up faster in Missouri than most states, while at the same time we’re making far too little progress in modernizing our grid. This legislation aims to make future energy costs more stable and predictable. It recognizes the value of a modern, secure and smarter energy grid to better serve Missourians.”

“There is a great need to pass legislation this year,” said Rep. T.J. Berry. “Low-energy prices have traditionally been an economic advantage in Missouri. Yet inaction by Missouri lawmakers has caused this advantage to slowly disappear. Action now means we keep our low-cost energy advantage which benefits our constituents and Missouri businesses. This legislation supports consumers’ call for stable and predictable prices, unlocks additional grid improvements and keeps or enhances current regulatory oversight of utilities.”

To bend the cost curve downward for Missourians, the legislation imposes what are effectively rate caps on electric energy costs which are enforced by severe economic penalties that ensure the caps will not be exceeded. These caps, if passed into law, would be enforced by the Missouri Public Service Commission (PSC) and may represent some of the most consumer-friendly utility rate caps in the country. If regulators approve a rate increase for an investor-owned electric utility above the 3 percent threshold, the utility would be subject to a significant penalty and potential loss of these new regulatory ratemaking tools.

Today, there are no rate caps on electricity prices in Missouri. With passage of this legislation, if a utility filed a regulatory rate review in consecutive years, energy rates would be limited to the 3 percent cap; if there are two years between rate review filings, rate increases would be limited to no more than approximately 6 percent (3 percent per year for two years), this is still about half of what historic rate increases have been. A key element is that the legislation maintains the PSC’s full authority and the utilities’ burden of proof before the commission for any rate revisions.