Legislative Bill Watch
Utility Surcharges Top List of Anti-consumer Legislation
Investor-owned monopoly utilities love creating new surcharges to pad their already generous profits. They propose new anti-consumer surcharges every year during the legislative session, and this year follows the pattern. If your state legislators approve of the following proposed surcharge legislation, your monthly utility bills will climb ever faster and ever higher, bypassing important consumer protections and handcuffing the ability of the Public Service Commission to keep rates at reasonable levels.
All of these surcharge proposals allow rate increases on a piecemeal basis. They could be levied even when the utility's revenue is exceeding its allowable level of profit. Current law permits rate increases only when a utility's overall level of revenue is insufficient.
Consumers Council opposes all legislation like these bills that provide for single-issue rates. Such legislation would warp the rate-making process that has served Missourians well for more than 100 years. In that process rates are determined only when all financial aspects of the utility -- income and expenses -- are taken into consideration. For more information on these bills go to: www.house.mo.gov/billcentral.aspx
Senate Bill 207/ House Bill 398 Electric Mega-ISRS Surcharge / Cost Overrun Tracker Bill This surcharge would apply to Ameren Missouri, KCP&L and Empire District Electric Company. It would be the most expansive and costly surcharge yet. The bill would force the Public Service Commission (PSC) to approve rates without first being able to review the related investments to ensure that the costs were prudent and reasonable. This would create a new ask-questions-later form of regulation that puts consumer interests last. The bill also includes an unprecedented "tracker" that would collect virtually all expenses incurred over a 3-year period and dump all those costs into rates. This tracker would act like giving the utility a credit card to charge whatever it wanted to ratepayers, thereby removing the incentive to cut costs that exists under current PSC regulation. This legislation could cost consumers hundreds of millions of dollars extra each year for the very same level of electric investment that would have been made under the existing rate-making process.
SB 240/HB 473 Natural Gas ISRS Surcharge Bill This surcharge bill would impact consumers of Laclede Gas Company and Missouri Gas Energy. It would increase the annualized amount of rate increases allowed by the surcharge from 10 percent to 13 percent. It would also delay the time that the PSC could review the prudence and reasonableness of such rate increases from three years to five years down the road. This legislation would also force natural gas consumers to pay 90 percent of the bad debt written off by these monopolies through a tracker.
SB 297 / HB 198 Water ISRS Surcharge Bill This surcharge legislation would impact consumers of almost all investor-owned water utilities. It would expand a surcharge that is currently limited to aging infrastructure in St. Louis County, and expand it statewide. It would also increase the size and type of projects that can be quickly passed on to consumers through such a surcharge with little PSC scrutiny.
CCM's ally in pro-consumer advocacy, the Fair Energy Rate Action Fund (FERAF), also opposes the electric surcharge bill:
Consumer Group Will Fight Proposed New Surcharge on Missourians’ Electric Bills
Jefferson City, Mo – The Fair Energy Rate Action Fund (FERAF) today announced its opposition to a new surcharge on electric bills being proposed in legislation being pushed by Missouri utilities. The new surcharge in SB 207 would cover everything from transmission to new energy generation.
An analysis by FERAF shows that if this surcharge had been in place since 2007, it would have cost Ameren Missouri consumers at a minimum an additional $200 million on their electric bills above and beyond what they already paid. This doesn’t include how much more business and residential customers would have paid to the other investor owned utilities.
This proposed surcharge comes on the heels of historic rate increases in Missouri. From 2006 to the end of 2013 customers served by Ameren will have paid roughly $2.8 billion more to the company due to the fuel surcharge passed by legislators and a series of rate hikes approved by the Public Service Commission.
This current proposal would make it even easier for investor-owned utilities to raise rates on Missourians by bypassing the traditional ratemaking process and instead engaging in single-issue ratemaking. Single-issue ratemaking causes rates to rise dramatically because it only allows regulators to consider costs by utilities in a single area, like infrastructure, as opposed to considering all factors, including possible areas of savings, as in a traditional rate case.
If utilities are able to engage in single-issue ratemaking on both their fuel and infrastructure costs, which make up the vast majority of their rate base, the duties of the Missouri Public Service Commission will become practically obsolete. These rate increases will become automatic with no discretion from the Commission and shift the burden of proof that currently rests with the utilities to show why they need a rate increase to the residential and business consumers that will be overcharged.
Many credit Missouri’s fair ratemaking process in holding down utility costs. Both consumer and business energy consumers warn that the new infrastructure surcharge could undermine Missouri’s economic advantage, crucial in today’s business climate and tight budget times being experienced by senior citizens, persons with disabilities, and low wage working families.
“Adding an expensive new surcharge to Missouri families and businesses electric bills is one of the worst things lawmakers could do in our current economy,” said Chris Roepe, FERAF Executive Director. “The impact on the pocketbooks of Missouri families and businesses cannot be ignored. The last thing Missourians need is for the legislature to allow another surcharge to be added to their electric bill.”
The state legislature already authorized a fuel surcharge added to many Missourians’ electric bills. This surcharge has already cost Missourians $478 Million since 2006, when utilities were permitted to assess it. This newly proposed surcharge would be even more costly to consumers because the utilities virtually restrict nothing in what may be included in the surcharge.