Senator Ed Emery’s Legislative Report for Feb. 16, 2018

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Safe, Secure and Reliable Electricity

“The bottom line is that in the next cold snap and ice storm, grandma will be less likely to lose electricity and if she still does lose power, it can be restored much faster.” 

The last two weeks have seen elevated conflict in the Senate over whether to modernize Missouri’s electric grid and stabilize electricity prices. Last week saw a 26-hour filibuster while a compromise bill was being negotiated between proponents and opponents. The compromise bill was perfected late last Thursday and received bipartisan support in its final vote of 25 in favor and six opposed a week later. It was claimed on the Senate floor that the threat of a previous question motion from the 25 plus senators who wanted to take a vote was what drove the four filibustering senators to a compromise. The compromise establishes a minimum investment requirement for infrastructure modernization.

Even while requiring investments, Senate Bill 564 will impose a three year rate freeze and hard annual caps as low as 2.85 percent (3 percent  for Kansas City Power & Light customers) for any rate increases requested over the next five years after an electric company files for the special program called Plant In-Service Accounting (PISA). By contrast, the rate increases Missourians have experienced over the last ten years have averaged between 5 and 6 percent: four times the national average. The caps, alone, would have cut those increases in half. Any requested changes in rates would still have to go through a full review (rate case) with the Public Service Commission (PSC) and would involve all stakeholders. No PSC oversight is reduced or removed by SB 564.

Besides limiting increases in rates to well below the 10 year trend, there will be definite downward pressure on prices from two fronts. First, grid upgrades will automate and secure the grid making maintenance easier and less expensive. Second, the modernized grid will give customers control over our electricity usage that has not been previously available. Some benefits will occur quickly as dollars are invested, but there will also be long-term impacts as the cost to deliver electricity to your homes pushes downward. Annual reports to the PSC must be submitted to the commission on what is planned and how a company performed during the prior year. If, after five years, the Public Service Commission determines the program is working to the benefit of consumers, it can extend it for five more years but no longer.

One major component of SB 564 is how it addresses the president’s federal tax cut. Without the bill, the tax savings going to Ameren would only be due to ratepayers at the next rate case which could be years away. However, the bill grants the PSC one-time authority to reduce customer rates to accommodate the tax cut. The rate reduction should be between 3 and 4 percent and requires the full amount be passed through to ratepayers almost immediately upon the company’s filing for PISA. The annual amount of the tax cut will be in excess of $100 million.

Finally, if we are to reduce the average cost of electricity long term, we must consider how to lower the fixed costs. That is the purpose of the economic development rider which allows business expansions or new businesses to enjoy reduced rates for up to five years. There would be no impact on existing customers for the five year period but afterward the new electricity load would help reduce the costs to everyone.  Missouri’s electricity grid is 100 years old as is our regulatory environment. Much has changed over the last 100 years, and modernization is way past due. If we want grandma and grandpa to enjoy heat in cold weather and cool in hot, it’s time to invest in the grid to secure it and to manage it more cost effectively.

There are additional less significant provisions in SB 564 which I won’t take space to address, but if you still have questions about the advantages provided by SB 564, please email or call my office to request a summary of the major components of the bill which we can email or mail to you. It will include a simplified explanation of each section.

In closing, we must all be prayerfully mindful of those families in Parkland, Florida, whose children and teachers were threatened or killed this week. The societal devaluation of life depicted by such senseless evil is unsettling to us all. May God’s unlimited mercy and grace overcome the deep sorrow and immeasurable loss that was inflicted.

Thank you for reading this legislative report. You can contact my office at (573) 751-2108 if you have any questions. We welcome your prayers for the proper application of state government.