Excerpted from St. Louis Post-Dispatch Editorial, May 30, 2013

The Utility Handouts

Early in the session, before lawmakers were fully educated on the dangers of single-issue rate-making in the case of monopoly gas and electric utilities, the Missouri Senate passed SB 240, which would do two bad things for consumers. First, it would expand the existing ability of gas utility companies to charge consumers an extra surcharge to pay for underground pipes and other infrastructure. Consumers would extend free credit to the utility company.

Currently gas companies can impose a three-year surcharge of up to 10 percent of their base rates. Lawmakers upped that to five years and 13 percent, even though the monopoly gas companies (such as Ameren Missouri and Laclede Gas) haven’t made the case that the existing surcharge isn’t doing the job. Second (and worse), the bill also forces consumers to pay up to 90 percent of the bad debt written off by the gas utilities, taking away the existing incentive for the monopolies to collect their debts.

With this bill, consumers lose big. By the end of the session, a bipartisan group of senators had realized that. So there’s little danger that the governor’s veto would be overridden. He should kill the bill.

Although a tentative agreement on Laclede Gas Co.’s rate case has been reached witht he company, the Public Service Commission staff and the Office of Public Counsel, hearings are still scheduled to be held in the St. Louis Region.

Click here for the calendar of hearings.

St. Louis Post-Dispatch, May 20, 2013

Laclede Gas Co. has an agreement in principle with the Missouri Public Service Commission staff and Office of Public Counsel to settle its request to boost natural gas rates by $48.4 million.

The utility filed notice of the agreement with the PSC on Monday, and said it would “resolve all outstanding matters” in the case. Terms were not disclosed.

A formal stipulation and agreement or an update on the status of negotiations with PSC staff and Office of Public Counsel will be filed by June 3, Laclede said.

That is the same date as the first of three scheduled public hearings on Laclede’s proposed rate increase. It is anticipated the hearings will be held as planned.

The St. Louis-based utility filed for a rate increase on Dec. 21 to recover investments in its 16,000-mile gas pipeline system.

As proposed, the average monthly bill for residential customers would increase by $4.93.

In a related Securities and Exchange Commission filing, Laclede said prompt resolution of the rate case would allow parties to focus attention on the company’s proposed $1.04 billion purchase of Missouri Gas Energy — a transaction that will almost double its presence in the state.

PSC approval of the transaction is required.

Separately, Laclede’s parent company, Laclede Group Inc., on Monday announced the planned public offering of up to 8.7 million common shares of stock to help fund the Missouri Gas Energy purchase.

Laclede also expects to grant underwriters a 30-day option to purchase up to 1.3 million additional shares.

The company, which had 22.7 million shares outstanding as of April 26, had said it would issue a combination of debt and equity to finance the Missouri Gas Energy purchase.

St. Louis Post-Dispatch, May 6, 2013

A bipartisan group of lawmakers is blocking a bill that would allow Ameren Missouri to raise electric rates on consumers more quickly with less regulatory oversight. Good for them. Now they should also block Senate Bill 240, which expands the ability of regulated gas utilities, such as Laclede Gas and Ameren, to raise rates outside the normal rate-case process. The bill would hit residential and small-business consumers the hardest. It is, quite simply, a money-grab by regulated monopoly utility companies that by all accounts are doing quite well financially.

If it weren’t such a bad bill, we’d have to take our hats off to the utility lobby for their clever shell game. With their right hand, they waved around the shiny object, Ameren’s Senate Bill 207, telling lawmakers they simply wanted an infrastructure just like gas companies had.

Meanwhile, with their left hands, the same coalition of utilities was advancing Senate Bill 240, a bill that completely changes the playing field on the existing gas surcharge.

Either way, consumers lose.

Unfortunately, the bill already passed the Senate and now just needs a final House vote to go to the governor. Majority floor leader Rep. John Diehl, R-Town and Country, would pick the pockets of businesses and homeowners if he lets this bad bill pass with no changes. It would guarantee that consumers would pay more to heat and cool their homes. He and Speaker of the House Tim Jones, R-Eureka, should use their considerable power to slow down this attack on consumers. Failing that, Gov. Jay Nixon should start warming up his veto pen.

ST. LOUIS, Mo., April 8, 2013 — An analysis by the staff of the Public Service Commission finds that under legislation pending in the Missouri General Assembly consumers would have to pay higher rates faster for electric utility infrastructure investments and would lose protections afforded under current law.

“These are exactly the points we at Consumers Council of Missouri have been making as we educate the public and legislators about the dangers of piecemeal ratemaking,” said Joan Bray, interim director of the organization.  “In the next four years, consumers across the state could be charged more than $600 million for building or repairing facilities without the utilities having to initially justify the costs.”

Consumers Council asserts that consumers fare better under the general ratemaking process in Missouri, when all revenues and liabilities of a utility are examined, Bray said.  A single-issue surcharge as proposed in Senate Bill 207 and House Bill 398 avoids such scrutiny.

The analysis responded to questions Senator Eric Schmitt (R-Glendale) posed to the PSC staff regarding the two bills.

Bray noted that the PSC staff analysis makes a great case that the current law is doing a good job of providing safe and reliable electric systems that consumers expect and need.  In fact, the report quotes executives of four investor-owned utilities in Missouri boasting about the reliability of their service, she said.

According to the analysis, the bill proposes two mechanisms that could dramatically affect consumers’ bills: an Infrastructure System Replacement and Addition Surcharge, or ISRS, and a “tracker.”  Regarding the surcharge, the report says, the “Staff is of the opinion that use of the ISRS rate mechanism included in SB 207 will have the impact of charging electric customers in Missouri higher rate levels at any point between general rate proceedings than would be charged to them under traditional rate regulation. … For all electric utilities combined, the amount of total ISRS increases over a four-year period would be approximately $275 million, according to the Staff’s updated estimates.”

The report also says “items … qualifying for the ‘tracker’ have tended to result in increases in a utility’s revenue requirement over time. No significant cost of service items that tend to decrease a utility’s revenue requirement over time … are included…. It is almost a certainty that implementation of this provision will mean higher customer rates in the future than would be authorized under traditional ratemaking regulation.”  The report estimates the tracker could cost Missourians $327 million over four years.

PSC Staff Analysis of SB207

Associate Press, April 16, 2013

JEFFERSON CITY, Mo. — The Missouri Senate has rejected a bill that would have allowed additional water and sewer companies to seek permission for surcharges to build new infrastructure.

Currently, only water companies in St. Louis County can impose such a surcharge between formal rate cases. Other water companies must get approval for a rate increase from the state Public Service Commission.

The legislation defeated by a 17-16 vote Tuesday would have allowed certain water companies across the state to levy the surcharge between cases. The surcharge could have been used for replacement lines and meters in addition to energy efficiency initiatives.

Supporters said the process worked in St. Louis County and should be opened up to other companies. Opponents said it would have raised utility rates without proper oversight.
—
The water bill is SB297

Now it wants to get in your pocket again!

Senate Bill 207 and House Bill 398, virtually identical bills, are working their way through the legislative process in the Missouri General Assembly.  The bills would let investor-owned utilities raise rates automatically — through a mechanism called an Infrastructure System Replacement Surcharge — without any meaningful review by the Public Service Commission.  These utilities are Ameren Missouri, KCP&L, KCP&L GMO and Empire District.

The bills gut Missouri’s rational general rate-making process that has given consumers at least a fighting chance against the utilities for many decades.

Over the past five years Ameren was allowed to raise its rates $1.1 billion — 43 percent.  That cost consumers $2.8 billion more, just when they were trying to make ends meet during the economic downturn that devastated many families.

No other state allows anything like this broadly defined surcharge.  It will drive up the cost of doing business in Missouri and could cause businesses to leave.

To read the bills, go to Senate.MO.Gov or House.MO.Gov.

St. Louis Public Radio has launched a new project that will keep track monthly of gifts and money lobbyists give to Missouri legislators.  Its first report tracks expenditures in the first two months of 2013.  In January and February Ameren Corp., provider of electricity and gas to a large portion of the state, topped the list with expenditures of more than $25,000.

KWMU, University of Missouri – St. Louis, April 10, 2013

St. Louis Public Radio has launched a new data-oriented project that will be keeping track of all the money Missouri legislators receive from lobbyists.

In just two months this year, Missouri legislators and statewide officials received more than a third of a million dollars in gifts from lobbyists. Expensive meals, basketball tickets and clothes are all common gifts to the people that craft our laws and govern us.

Probably none of this is surprising to you. It’s fairly understood that lobbyists spend a lot of money on public officials. But there hasn’t been an easy way to break down that large, and often foreign-seeming $338,396  that lobbyists spent on politicians.

That’s why St. Louis Public Radio is starting a new project to keep track of that money, and hopefully answer the questions of who’s giving it, who’s receiving it, and what it’s going toward.

St. Louis Public Radio Report on Lobbyist Spending

Fair Energy Rate Action Fund, March 11, 2013

Businesses, just like politicians, need to be held accountable to the public when making public policy. Ameren, Empire and KCP&L’s recent explanation for why they need to abolish the PSC’s oversight of new expenditures and add a surcharge to the electric bill of every Missouri business and residential customer is a case in point.

The ISRS legislation was pitched to legislators as allowing electric companies to be able to collect a surcharge from customers to replace outdated and unreliable infrastructure, just like water and gas companies are able to do on a limited basis. If only it were true.

Unfortunately some extremely controversial and costly provisions were included in the legislation that are nothing like how water and gas companies are permitted to operate. This fact has left many legislators scratching their heads and hitting reverse.

These false claims include:

• Changing the definition of what an ISRS is all-together, unlike the more restrictive uses for water and gas companies. In fact it will cost customers an additional $14 million for every $100 million the utility spends through the ISRS. This additional $14 million per $100 million spent provides no benefit to customers other than opening up their pocketbook sooner and wider for the utility company.
• Slipping in an expensive cost overrun tracker that puts into law a disincentive for utilities to operate efficiently and keep their spending in check. The utilities can rack up overrun costs on this newly proposed ratepayer credit card. Had this provision been in effect over the past several years it would have cost Missourians an additional $200 million on top of the $5.7 BILLION in rate increases paid during this time. Missouri businesses and residents would have received the same exact service, but been forced to pay over $200 million more for absolutely nothing in return.
• Allowing the electric utilities to build brand new generation facilities through a new surcharge without going through the traditional ratemaking process that includes a prudency review and full revenue versus cost review by the Public Service Commission. The capital expenses allowed as part of this proposed surcharge are a monumental $3.4 BILLION over a three year period. To put this in perspective, under the electric ISRS, utility companies could spend more money than it cost to build Callaway I or Iatan II. By comparison, water companies can only spend $125 million every three years.
• Claiming that Ameren’s bond rating is so low it isn’t able to borrow money at the cheapest rates possible. The only problem with this talking point is that Ameren Missouri, funded by Missouri customers only, is one of the healthiest utility companies in the country with an A3 bond rating, which is a strong investment grade according to Moody’s. Ameren’s corporate bond rating is poor because its other two units, Ameren Illinois and Ameren Generating Company, have experienced huge losses in the open market lately. It frankly should not be the Missouri legislature’s job to bail out the poor business practices of Ameren Illinois and Ameren Generating Company.
• Utilities have argued that this won’t lead to higher electric bills for Missouri families and businesses. By its very definition a surcharge adds costs to consumers. That’s why in a recent poll by Public Opinion Strategies, 71% of Missourians opposed this legislation, with 77% of Missourians less likely to support a candidate for office in Missouri that favored this legislation.

Proponents of this legislation also continue to talk about the jobs that would be created, even though the opposite is actually true. A study released last week, by a firm that has done work recently for Ameren, showed if electric rates were increased by 10%, as the electric ISRS allows, Missouri would lose 60,000 jobs. All of the hard work that has been done in recent years by legislators to make Missouri a more business friendly state might as well be thrown out the window if this legislation passes.

The first question these utility companies need to answer is why they proposed legislation that says one thing but they claim does another. These monopolies need to be accountable and prove they can be trusted with more of Missourians’ hard earned money.

Missouri Times, March 26, 2013

JEFFERSON CITY, Mo. – A contentious Public Service Commission meeting ended in consensus on Wednesday with the PSC voting unanimously to allow the expedited request of Sen. Eric Schmitt, R-Glendale, to provide the Senate more information on the pending “ISRS” legislation in the form of a formal docket and have the information returned to Senator Schmitt as soon as possible.

Schmitt was pleased by this affirmation by the commission’s decision to review the legislation that would allow investor owned utilities to charge customers a surcharge in order to pay for previously completed infrastructure projects.

“I am pleased the PSC has kept the docket open and will allow a full review of the facts, SB207 and its impact on our constituents,” Schmitt said. “Allowing this process to move forward will aid in general assembly’s deliberation on this very important matter.”

While supporting keeping the docket open, the PSC did amend their prior plans for a full inquiry that would include a hearing and a discovery phase. Their decision came after Senate President Pro Tem Tom Dempsey and Sen. Brad Lager, chairman of the Commerce, Consumer Protection, Energy and the Environment Committee, penned a letter urging them to cancel the hearing.

Dempsey told The Missouri Times that he was fine with receiving technical advice from the PSC on a bill.  But, the decision to hold a hearing under Section 386.380.2 RSMo should be discussed by the whole Senate or House, or perhaps requested by the President Pro Tem or Speaker of the House acting in their capacity as presiding officers of their respective chambers.

Lager also expressed support for the way in which the PSC handled the matter.

“I think they did a wise thing by canceling the hearing. They should respond to senators questions, and I comfortable with how they handled the situation,” he said.

In a previous scenario, Lager and Dempsey sent a letter asking for the PSC to increase their involvement in a utility matter. However, Lager pointed out that the circumstances were very different from then and now.

“The previous letter I sent to the PSC was meant to ask for technical information and was to be provided while the legislature was not in session,” he said.

The PSC reached consensus on allowing the docket to remain open after nearly an hour of contentious debate. Chairman Robert Kenney aggressively advocated for a full, open docket that would include a hearing and a discovery phase. Commissioner Terry Jarrett led the fight for as narrow an inquiry as possible while repeatedly saying he was for transparency, just not for a larger inquiry on this issue.

Commissioner Terry Jarrett argued that opening this docket had brought the PSC into the ISRS debate, which was met by a lengthy rebuttal by Chairman Kenney, who carefully referenced many past instances where the PSC had already been involved in the ISRS issue.

“The public docket would just be a framework for the PSC to do what we were already doing only on the record and in public instead of the way we were doing it,” Kenney said.

Commissioner Bill Kenney suggested that the request for further PSC involvement was a strategic move by opponents of the ISRS legislation to use the PSC as a pawn to delay debate and make passage less likely.

Lager said he agreed with Kenney’s view: “I believe invoking the PSC here was meant as a stalling tactic, and I believe it was very effective. I would speculate at this point the ISRS legislation has less than a 25 percent chance of passing.”

However, Schmitt specifically requested an expedited request, and The Missouri Times has confirmed a letter was signed by five Senators — Dan Brown, Doug Libla, Wayne Wallingford, Mike Parson, and Gary Romine — asking Dempsey to wait to begin debate on SB207 until the PSC has issued their expedited reply to Schmitt.

Jarrett argued several times after it was clear Schmitt’s request for more input would be granted to send that reply as soon as possible.

“I want to see it sent as soon after comments close on April 1as possible,” he said. With the legislature on break for Easter, the earliest the PSC response is likely to arrive when the Senate is in session would be on April 8.

While Lager may be pessimistic about the chances of passing the legislation, the war between both sides raged on. After the PSC meeting, Irl L. Scissors, executive director of Missourians for a Balanced Energy Future, sent out a statement.

“Throughout the legislative process, MBEF has worked with lawmakers from across the political spectrum and from every corner of the state, as well as with the Executive branch,” he said. “We will continue to provide information and answer questions about this important legislation that will keep moving Missouri forward by modernizing regulations, enabling investment in infrastructure and creating thousands of jobs in Missouri.”

Chris Roepe, a spokesman for the Fair Energy Rate Action Fund, responded: “The fact that Missouri utility companies continue to refuse to provide information and oppose a full investigation, public hearing and full exposure of this new surcharge legislation should tell Missourians all they need to know about what this new law will do to their electric bill.”