Op Ed: Deceptive Tickets Can Ruin Show

By Cara Spencer

St. Louis is fortunate to have a fantastic show scene. International tours stop here regularly and include local artists who perform here multiple times a year, such as Pokey LaFarge and Chuck Berry. And out-of-town big names such as Kings of Leon, The Black Keys and Keith Urban are stopping through this fall. People we thought we’d never see play again, like Merle Haggard, are hopping in buses and stopping here. We even get fantastic comedy like Hannibal Buress.

But before you get ready to enjoy the show, you should be sure to check the fine print that could leave you paying for tickets that cannot be used if something unexpected disrupts your plans.

This fine print describes what the live event industry calls paperless or credit card entry ticketing. This form of ticketing requires consumers to buy tickets online with a credit card and then use that same credit card and their photo ID to gain entry to the event. I’m sure you’ve see it, this required ticket method has been on the rise and many shows are using it, including Lady Antebellum and Arcade Fire earlier this year and the Black Keys and Eric Church coming up.

Here the catch. The best tickets to these shows are totally nontransferable. This can spell a host of problems for unsuspecting consumers who assume they will be able to give away or resell their tickets if they end up unable to go.

What if something comes up and you can’t attend the show you’ve been waiting for? Because your tickets are tied to your credit card and photo ID, you cannot resell them or even give them away. Now you’ve got a worthless piece of paper and you’ve left empty seats in the front row. And of course, most tickets are nontransferable unless you purchase event insurance — a separate issue that takes advantage of consumers.

Additionally, if consumers buy several tickets for family members or friends to sit together, the entire group has to enter at once. If someone in the party is late to arrive, everyone may miss part of the show. No one wants to hear the sound of their favorite act starting up onstage while they’re waiting at the gate because the buddy who bought the tickets is stuck at work.

The worst is the failure of the ticket seller, in most cases Ticketmaster, to adequately explain these restrictions to consumers when they buy tickets. As anyone who has tried to buy tickets online to a popular show knows, the process is often frenzied, with consumers anxiously awaiting the opportunity to buy the best tickets available and a countdown clock ticking to the moment the tickets selected will be thrown back into the mix.

At the very least, Ticketmaster and any other ticket seller that uses technology to restrict what consumers may do with the tickets they purchase, should be required to boldly and clearly disclose to consumers early and through the purchasing process that credit card entry tickets are nontransferable. Anything less deceives consumers into believing they can easily give their purchased tickets away, resell them or distribute ahead of the show.

Consumers should not be forced to lose 100 percent of the cost of the ticket because their plans changed and they are stuck with tickets they cannot use.

Consumers Council of Missouri applauds Missouri Attorney General Chris Koster for leading the effort among state attorneys general to require that the ticket purchasing process be more transparent. We are hopeful that his office will require Ticketmaster or other sellers to end this deceptive practice in our state. We encourage consumers to join us in supporting Koster in this effort.

Cara Spencer is a member of Consumers Council of Missouri. She is director of business development at Nebula Coworking in St. Louis.

NCL Issues Guide to Buying Live Event, Sports Tickets

Washington, DC – With many of the top recording artists on tour through the fall and the NFL season about to kickoff, the National Consumers League (NCL) today released a “Practical Guide to Buying Live Event and Sports Tickets” to help fans navigate the often confusing and cumbersome process of buying tickets online.

Once as easy as going to the box office, stadium, or the local record store, buying tickets to live event and sporting events has become a maze of ticket websites, resellers, online classified ads, and street vendors all competing for consumer dollars.

“We want to make sure fans have the information they need to make the best ticket buying decisions; we also want to raise awareness about anti-consumer practices in the ticketing industry,” said John Breyault, NCL’s Vice President of Public Policy, Telecommunications and Fraud. “For example, fans should be on the lookout for restricted ticketing, undisclosed price floors, and deceptive websites that lure unsuspecting fans into buying resale tickets. NCL has developed a list of tips that will help consumers find their way through this thicket of potential problems.”

Restricted ticketing, which ties the consumer’s ticket to their credit card and ID, makes it difficult, if not impossible, for consumers to transfer their tickets or share them. And the 30 million Americans who do not have a credit or debit card can’t even purchase this type of ticket in the first place.

“We think consumers should have the right to choose what they do with their tickets after purchase. If plans change, no one should have to lose 100 percent of the ticket value because they can’t give it away or resell it,” added Breyault.

In addition, some resale marketplaces, such as Ticketmaster’s TicketExchange, limit how low a ticket can be priced. That’s an outrageous practice. This price floor is not disclosed to consumers, who might think they’re getting a reasonable deal; in reality, there may be cheaper tickets available on other sites that don’t control prices.

However, when shopping for tickets online, particularly when doing an Internet search, consumers should be sure they know where they are buying their tickets from and whether it is a reseller or the box office that they are doing business with.

“Some ticket resellers create websites that pose as a box office or the official ticket seller. These are deceptive, and consumers should take the time to make sure they know if they are buying a resale ticket or not,” said Breyault.

Click here for the ticket buyers’ guide.

Missouri AG Challenges Ticketmaster Sales Tactics

Missouri Attorney General Chris Koster took the lead among state attorneys general in asking Ticketmaster and Live Nation to change disclosures about entering the venue and reselling or transferring tickets to consumers before they buy live event tickets.  In February, Koster reached an agreement with Ticketmaster to change some its sales practices.

Click here to read Attorney General Koster’s news release about the agreement.

Click here to read the full text of the letter Koster had sent Ticketmaster.

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Payday Lending Rules Proposed by Consumer Protection Agency

The New York Times, March 26, 2015

BIRMINGHAM, Ala. — The Consumer Financial Protection Bureau, the agency created at President Obama’s urging in the aftermath of the financial crisis, took its most aggressive step yet on behalf of consumers on Thursday, proposing regulations to rein in short-term payday loans that often have interest rates of 400 percent or more.

The rules would cover a wide section of the $46 billion payday loan market that serves the working poor, many of whom have no savings and little access to traditional bank loans. The regulations would not ban high-interest, short-term loans, which are often used to cover basic expenses, but would require lenders to make sure that borrowers have the means to repay them.

The payday loan initiative — whose outlines were the focus of a front-page article in The New York Times last month — is an important step for a consumer agency still trying to find its footing among other financial regulators while defending itself against fierce attacks from Republicans in Washington.

On Thursday, Mr. Obama lent his weight to the consumer bureau’s proposal, saying that it would sharply reduce the number of unaffordable loans that lenders can make each year to Americans desperate for cash.

“If you lend out money, you have to first make sure that the borrower can afford to pay it back,” Mr. Obama said in remarks to college students here. “We don’t mind seeing folks make a profit. But if you’re making that profit by trapping hard-working Americans into a vicious cycle of debt, then you got to find a new business model, you need to find a new way of doing business.”

The president’s appearance at Lawson State Community College is part of a campaign-style effort to portray Republicans as out of touch with the needs of middle-class Americans. In his remarks, he accused Republicans of backing a federal budget that would benefit the wealthy at the expense of everyone else. And he denounced his adversaries in Congress for seeking to terminate the consumer agency’s automatic funding.

“This is just one more way America’s new consumer watchdog is making sure more of your paycheck stays in your pocket,” the president said. “It’s one more reason it makes no sense that the Republican budget would make it harder for the C.F.P.B. to do its job.” He vowed to veto any attempt that “unravels Wall Street reform.”

Yet even supporters of the consumer bureau’s mission were critical on Thursday, saying that the proposed payday lending rules do not go far enough.

A chorus of consumer groups said that loopholes in the proposal could still leave millions of Americans vulnerable to the expensive loans. Lenders have already shown an ability to work around similar state regulations, they said.

“We are concerned that payday lenders will exploit a loophole in the rule that lets lenders make six unaffordable loans a year to borrowers,” said Michael D. Calhoun, the president of the Center for Responsible Lending.

Payday lenders say that they welcome sensible regulation, but that any rules should preserve credit, not choke it off. “Consumers thrive when they have more choices, not fewer, and any new regulations must keep this in mind,” said Dennis Shaul, the chief executive of the Community Financial Services Association of America, an industry trade group.

The attacks from both directions underscore the challenges facing the bureau, and its director, Richard Cordray, as it works to fulfill its mandate while pressure grows from Congress and financial industry groups.

In drafting the rules, the bureau, according to interviews with people briefed on the matter, had to strike a precarious balance, figuring out how to eliminate the most predatory forms of the loans, without choking off the credit entirely.

The effort to find that balance can be seen in the choice that lenders have in meeting underwriting requirements under the proposal.

Under one option, lenders would be required to assess a customer’s income, other financial obligations and borrowing history to ensure that when the loan comes due, there will be enough money to cover it. The rules would affect certain loans backed by car titles and some installment loans that stretch longer than 45 days.

Or the lender could forgo that scrutiny and instead have safety limits on the loan products. Lenders could not offer a loan greater than $500, for example.

Under this option, lenders would also be prohibited from rolling over loans more than two times during a 12-month period. Before making a second or third consecutive loan, the rules outline, the lenders would have to provide an affordable way to get out of the debt.

For certain longer-term loans — credit that is extended for more than 45 days — the lenders would have to put a ceiling on rates at 28 percent, or structure the loans so that monthly payments do not go beyond 5 percent of borrowers’ pretax income.

Driving the proposal was an analysis of 15 million payday loans by the consumer bureau that found that few people who have tapped short-term loans can repay them. Borrowers took out a median of 10 loans during a 12-month span, the bureau said. More than 80 percent of loans were rolled over or renewed within a two-week period.

Nearly 70 percent of borrowers use the loans, tied to their next paycheck, to pay for basic expenses, not one-time emergencies — as some within the payday lending industry have claimed.

Such precarious financial footing helps explain how one loan can prove so difficult to repay. Borrowers who take out 11 or more loans, the bureau found, account for roughly 75 percent of the fees generated.

Until now, payday lending has largely been regulated by the states. The Consumer Financial Protection Bureau’s foray into the regulation has incited concerns among consumer advocates and some state regulators who fear that payday lenders will seize on the federal rules to water down tougher state restrictions. Fifteen states including New York, where the loans are capped at 16 percent, effectively ban the loans.

The rules, which will be presented to a review panel of small businesses, are likely to set off a fresh round of lobbying from the industry, said Senator Jeff Merkley, Democrat of Oregon.

“They should instead strengthen this proposal by absolutely ensuring it is free of loopholes that would allow these predatory loans to keep trapping American families in a vortex of debt,” he said.

Mr. Cordray introduced the rules at a hearing in Richmond, Va., on Thursday, flanked by the state’s attorney general and consumer groups from across the country. At the start of the hearing, Virginia’s attorney general, Mark Herring, said the choice of location was apt, describing the state as “the predatory lending capital of the East Coast,” a description he said was shameful.

The hearing offered a rare glimpse at the forces aligning on either side of the payday loan debate. On one side, there was an array of people against the rules, from industry groups to happy customers, to dozens of payday loan store employees — many wearing yellow stickers that read, “Equal Access, Credit For All.”

On the other, there were consumer groups, housing counselors, bankruptcy lawyers and individual borrowers, all of them calling for a real crackdown on the high-cost products.

Both sides had their horror stories. Some told of stores forced to close, while others described how such loans had caused tremendous pain and fees.

At one point, a woman wearing a neon pink hat who gave only the name Shirley burst into tears, saying that without the loans, her cousin with cancer would be dead.

Martin Wegbreit, a legal aid lawyer in Virginia, called payday loans “toxic,” noting that “they are the leading cause of bankruptcy right behind medical and credit card debt.”

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Nixon Appoints Ex-Chiefs QB to PSC

St. Louis Beacon, January 9, 2013

Gov. Jay Nixon has appointed Bill Kenney to the Missouri Public Service Commission, a move that could end a temporary logjam for the powerful entity that regulates the state’s utilities.

Kenney is a former Republican state senator from the Kansas City area who most recently served as Lt. Gov. Peter Kinder’s chief of staff. He is perhaps best known for his tenure as a quarterback for the Kansas City Chiefs.

“As a former two-term state senator and Senate majority floor leader, Bill Kenney has the experience and knowledge necessary to be a valuable member of the Public Service Commission,” Nixon said in a statement. “I am confident he will put those skills to effective use on behalf of Missouri families, businesses and communities while serving on the PSC.”

Nixon’s move was important because Republicans may have blocked PSC Commissioner Steve Stoll’s nomination without a corresponding Republican appointment. Stoll is a former Democratic state senator.

The Associated Press reported last year that GOP senators had no problem with Stoll’s nomination but wanted the governor to fill a vacancy caused by the departure of Republican PSC Commissioner Jeff Davis.

Kinder – who served as Senate president pro tem when Kenney was in office – released a statement praising the move. He called Kenney “a distinguished public servant who served honorably as the majority leader of the Senate and has been an asset to the lieutenant governor’s office.”

“I am pleased that Gov. Nixon appointed my chief of staff, Bill Kenney, to the Public Service Commission – the second time a Democratic governor has selected my chief of staff for this important governmental body,” Kinder said. “Gov. Bob Holden appointed Jeff Davis from my office in 2004, and now Gov. Nixon has picked Bill Kenney as Jeff’s replacement. … I wish him well in his new position.”

The Public Service Commission is responsible, among other things, for deciding utility cases and for the promulgation and enforcement of administrative rules. Kenney’s appointment must be approved by the Missouri Senate.

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More Payday Lenders Than McDonald’s Shows Value of Fast Money Across U.S.

NBC News, November 24, 2014

There are more payday lenders in the U.S. than McDonald’s or Starbucks, reflecting economic conditions in which fast money is even more important than fast food.

Payday lending, in which users pay a fee for what amounts to an advance on their paychecks, has blossomed over the past 20 years. There are now more than 20,000 across the country, according to the St. Louis Federal Reserve, while McDonald’s boasts 14,267 locations.

They’re used most often by people who lack access to ordinary credit—often those at or near the bottom of the economic spectrum, with nearly a quarter living on public assistance or retirement income.

While the loans can fill a need for fast cash, they also can become a way of life for users who end up paying effective annual percentage rates, or APRs, well in excess of 300 percent.

Consequently, they’ve attracted the attention of regulators, politicians and economists why worry about those left behind in a decidedly uneven economic recovery.

“A large number of Americans are literally living paycheck to paycheck. They’re one unplanned expense away from being in financial distress.”

“A large number of Americans are literally living paycheck to paycheck,” said Greg McBride, chief financial analyst at Bankrate.com. “They’re one unplanned expense away from being in financial distress.”

McBride cited some sobering statistics: Twenty-six percent of Americans have no emergency savings and 41 percent say their “top financial priority” is simply staying current with their expenses or getting caught up on their bills. This is occurring even as the financial headlines trump new stock market highs by the day and President Barack Obama’s administration touts the U.S. economic recovery.

“Americans that have assets have seen the value of those assets appreciate, but Americans who don’t have those assets, they’re not feeling the recovery in their pocketbooks, particularly at a time of stagnant income,” McBride said. “If you don’t have those things, and you haven’t seen a pay increase, then you’re no better off, you’re no wealthier.”

Finding Themselves Poorer

Those using payday loans, in fact, may find themselves poorer.

The mean, or typical, payday borrower makes $22,476 a year and paid $458 in fees. However, a quarter of those borrowers paid $781 or more in fees due to repeat usage, according to the Consumer Finance Protection Bureau, which is closely monitoring the approximately $50 billion industry and will likely put forward more regulation.

About 48 percent of borrowers had done 10 transactions in the CFPB’s time sample, and 14 percent had more than 20 transactions. The median borrowing amount was $350, for a 14-day term. Median fees for $15 per $100, which computes to an APR of 322 percent.

In all, consumers using payday loans were on the hook to their lenders for 199 days, or about 55 percent of the year.

“It appears these products may work for some consumers for whom an expense needs to be deferred for a short period of time. The key for the product to work as structured, however, is a sufficient cash flow which can be used to retire the debt within a short period of time,” the CFPB wrote in a 2013 report studying the payday proliferation.

“However, these products may become harmful for consumers when they are used to make up for chronic cash flow shortages,” the report continued. “We find that a sizable share of payday loan and deposit advance users conduct transactions on a long-term basis, suggesting that they are unable to fully repay the loan and pay other expenses without taking out a new loan shortly thereafter.”

A year ago this month the bureau began accepting consumer complaints and received thousands soon after, according to the St. Louis Fed, which in its own recent report cited the potential for payday loans to “become a financial burden for many consumers.”

Payday lending is allowed in 36 states, and fees are lowest in the states that regulate them.

Bankrate’s McBride cautioned, however, that excessive regulation could be problematic if it ends up denying cash-strapped consumers who can’t get conventional loans or credit cards access to emergency funds.

“That’s a double-edged sword,” he said. “In some ways it can benefit consumers but in some ways it can hurt consumers. Limitations on how often that borrowed amount can be rolled over could keep consumers from falling into a bottomless pit of debt. But there’s certainly a fine line. These services exist because the demand is so high. The reality is a lot of Americans need short-term credit.”

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Data Revealing Higher Insurance Rates in Missouri Too Late to Help, CCM Says

Inside Health Policy, November 20, 2014

The executive director of the Missouri consumer advocacy group that had filed action against HHS for failing to provide information on issuers’ proposed rate increases called the department’s recent release of premium data too little too late, and said she remains disappointed with the department. HHS did release some of the information but did so in a non-user friendly manner, using spreadsheets instead of forms that are difficult to review and still did not include the needed data.

Advocates are “very disappointed” about the failure to include the detailed information, Joan Bray, executive director of the Consumer Council of Missouri, said in a Wednesday call with reporters. She said that while some data was available, HHS did not release the information in ‘Part 3” of the rate justifications in which issuers are supposed to explain the assumptions behind their proposals. Bray said that from what staff “can figure out so far,” after looking through the 135 columns and more than 65,000 rows of data, is that the rate increases in Missouri exceed the national average. She pointed out that a Blue Cross plan in Kansas City increased rates by 13 percent and a Coventry plan for HMOs has gone up by 23 percent.

The fundamental purpose of the the regulation was to enable the public to analyze and to comment on proposed increases, Bray said. Missouri does not have a regulator who is involved so it is critical for public interest groups to be able to see the proposed rates, figure out if they are justified and comment on them.

HHS is boasting about how transparent it is being and how the release enables academics to conduct research on the rates, but the point of the law is not about academic researchers it is about consumers, Bray argued.

Is it extremely important for Missouri, in particular, that HHS to comply with its own regulations since the state does nothing to enforce or even monitor compliance with the ACA due to state law. But HHS has “shirked” its responsibility, Bray said, adding that she is “very offended” that consumers in her view Missouri are treated as second class citizens when it comes to implementation of the law.

Although there may be no power to force plans with large proposed increases to come down, Bray said, HHS can and should hold public hearings in cases where they may be unjustified. In other states, when regulators shined the light on large increases the companies themselves backed off and returned with lower numbers, she pointed out.

Meanwhile, Bray said, open enrollment will go on and people will have to live with the rates. She said the group continues to study and prepare for next year since “we don’t want this to happen again.”

As far as the case itself, Bray said there is still no court date.

In September, former CMS insurance chief Jay Angoff had filed suit in the U.S. District Court in Eastern Missouri against HHS on behalf of the council. The lawsuit specifically deals with insurance rates in Missouri, which does not require insurers to file documentation with the state or make information public regarding proposed rates. The lawsuit says that, as a result, residents of the state are entirely dependent on HHS for information about insurance rates and insurers’ justifications for those increases. The suit says the consumer groups have a statutory right to obtain the information and HHS has no legal basis for failing to disclose those records.

CMS on Friday released the premiums for all states, but the agency did not include any analysis except to note that premiums were stable. Avalere Health offered an initial look of rates for federally facilitated exchange states, which includes Missouri.

According to Avalere’s analysis of Missouri plans, the lowest cost Bronze plan increased an average 9 percent, compared to a 3 percent for all FFM states, the lowest cost Silver plan increased 5 percent compared to the 4 percent FFM average, and the second lowest Silver plan increased by 7 percent in the state, compared to the 3 percent average for all FFM states.

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Rise in Black Households’ Banking Reflects Success of Local Program

St. Louis Post-Dispatch, October 29, 2014

A local effort to increase the availability of banking services to minority and low-income households appears to be gaining traction, according to the latest figures from the Federal Deposit Insurance Corp.

The percentage of black households in the St. Louis area who were unbanked — that is, didn’t have a checking or savings account — fell to 13.3 percent in 2013, a sharp decline from 29 percent in 2011. When the survey results were released in 2009, the St. Louis area ranked highest in the nation for unbanked black households, at 31 percent.

Nationally, unbanked black households fell to 20.5 percent last year, down from 21.4 percent in 2011, according to the FDIC’s National Survey of Unbanked and Underbanked Households report released Wednesday.

The highest unbanked rates in the U.S. are among non-Asian minority households, lower-income, younger and unemployed households, the FDIC survey found. Unbanked Hispanic households in the U.S. fell to 17.9 percent in 2013, down from 20.1 percent in 2011.

The large number of unbanked minority and low-income households in St. Louis revealed in past FDIC reports spurred local nonprofit leaders, bankers and others to take action. The St. Louis Regional Unbanked Task Force, organized in 2011, has focused on increasing the availability of banking products while convincing those who pay high fees to cash checks and access other financial services to instead open a checking or savings account.

“It’s reflective of the collaborative work we’ve been doing with the task force and Bank On Save Up,” said Jackie Hutchinson, co-chair of the task force and vice president of operations at the nonprofit People’s Community Action Corp., which provides food, clothing, financial literacy and other services in St. Louis. She called the latest FDIC survey results encouraging.

“When people have bank accounts, they move on to participate in the economy,” Hutchinson said. “We’ve seen people go from unbanked to getting an account and purchasing a car or home. It improves the economy as a whole in the St. Louis area.”

The group’s first initiative, Bank On Save Up, started in February 2013 with a goal of opening 20,000 accounts in the St. Louis region within two years. Similar Bank On initiatives formed across the country after the first program was started in San Francisco in 2006.

When it formed locally, 18 banks and credit unions said they would offer accounts requiring low minimum amounts to open, access to free online banking services and safeguards to help customers avoid overdraft fees. The number of banks and credit unions now offering the Bank On accounts locally has since grown to 20.

Since its debut, the Bank On program led to 2,435 new accounts through the second quarter of 2014, far short of the goal. But Hutchinson said some partner banks didn’t yet have the ability to capture the accounts attributed to Bank On through their current data systems.

Families save an estimated $2.9 million annually that they otherwise would have spent on fringe financial services such as payday loan fees, according to the task force. Additionally, the Bank On accounts have a 95 percent retention rate, higher than the initiative’s 80 percent goal when the program started.

“In an era of declining wealth, it’s good to see a greater number of banked households,” said Ray Boshara, director at the Federal Reserve Bank of St. Louis’ Center for Household Financial Stability, adding that banking accounts are an essential first step to financial stability.

Boshara said that in addition to traditional brick-and-mortar bank branches, many people were using technology to better manage their finances. “Technology is bringing the cost down, and we’re seeing more apps that help people manage their money in real time, he said.


The percentage of households in the St. Louis region that don’t have a checking or savings account dropped by more than half to 4.2 percent between 2011 and 2013, according to the latest survey results from the FDIC.

The last time the FDIC did the survey, in 2011, an estimated 9.7 percent of St. Louis area households were unbanked.

The FDIC’s report estimates the percentage of unbanked households dropped to 7.7 percent nationally in 2013, down from 8.2 percent in 2011.

The survey estimates 9.6 million U.S. households are unbanked, down from about 10 million in 2011. Those 9.6 million unbanked households represent 25 million people in the U.S. age 16 and over who lack a checking or savings account.

In addition, the FDIC looked at households that had bank accounts but also used expensive alternative financial services such as payday loans, pawn shops or rent-to-own services in the past 12 months. These “underbanked” households remained at about 20 percent nationally.

The FDIC conducts the survey every two years in partnership with the U.S. Census Bureau. At an advisory committee on economic inclusion meeting Wednesday morning, Ryan Goodstein, a senior financial economist in the FDIC’s Division of Depositor and Consumer Protection, said the decline in unbanked households was because of improving economic conditions, such as lower unemployment rates and higher household income.

Additionally, changing demographics as American households are older and better educated attributed to the decline in unbanked households, Goodstein said.

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Coalition Disputes PSC Ameren Ruling

Jefferson City News Tribune, October 6, 2014

The Fair Energy Rate Action Fund, or FERAF, thinks the Missouri Public Service Commission got it wrong last week.

With a unanimous vote, the five-member commission on Wednesday said that Noranda Aluminum had not made its case that Ameren had taken in more money than its current rates allowed, making those rates “unjust and unreasonable.”

“Ameren’s own quarterly reports show it has earned excessive profits for the past 33 months,” Chris Roepe, FERAF’s executive director, said in an email. “We are disappointed that Ameren was not told to lower all customers’ rates by millions of dollars because of its over-earning.”

In part of last week’s 22-page order denying the over-earnings complaint, the PSC seemed to agree with the over-earnings claims, based on the “surveillance” reports Ameren must file with the commission every quarter: “The September 30, 2013, surveillance report shows that Ameren Missouri earned an actual return on equity of 10.32 percent for the twelve months ending September 30, 2013.

“Ameren Missouri’s authorized return on equity, established in its last rate case, was 9.8 percent.

“Those numbers would indicate that Ameren Missouri earned approximately $29.2 million more than its authorized rate of return during that period. Earlier surveillance reports also show that Ameren Missouri earned more than its authorized rate of return in those periods.”

But, the commissioners added, “It is important to understand that the earnings levels reported in the surveillance reports are actual per book earnings of the utility and cannot be compared directly to an authorized return on equity to determine whether a utility is over-earning.

“Actual per book earnings are often computed differently than earnings used for the purpose of establishing rates.”

Additionally, the commissioners noted, book earnings fluctuate from month-to-month and season-to-season, as power demands change. Nor do they account for planned expenses that haven’t happened, yet — such as rebates Ameren must pay to customers adding solar units, and capital improvements being made to Ameren’s distribution system.

The commission sees the return-on-equity number it sets in a rate case as a target that the utility will sometimes be above and, other times, be below.

But FERAF, and others, argue that it is a cap, a top limit to a utility’s earnings.

“This is money taken directly out of the pockets of Missouri families, who have nowhere else to get their electricity because Ameren is a monopoly,” Roepe said. “We can’t imagine a more blatant case of over-earning by a monopoly than this one.”

In a separate, also unanimous vote, the PSC on Wednesday rejected several formal motions — and numerous letters from politicians — to rehear Noranda’s request for a substantial reduction in the rate it pays to buy electricity from Ameren Missouri.

The commission on Aug. 20 denied Noranda’s request to cut its electric rate by about 25 percent and — to keep Ameren’s income revenue-neutral — raise all other customers’ rates by around 2 percent.

In that case — as well as the over-earnings case decided last week — the commissioners said Noranda’s evidence presented both in prepared testimony and in the PSC’s formal hearings ultimately didn’t make the case that it needed a better rate for its electricity than the lowest rate of any Ameren customer.

Commissioners have approved that lowest rate because Noranda’s demand for electricity is constant and predictable, and Ameren’s costs to provide that power are less than its costs for most other classes of customers.

But, the commissioners said in the August order: “Missouri law forbids a utility to charge a rate that gives an undue or unreasonable preference to any particular customer or class of customers, and the Commission cannot lawfully approve such a rate.

“Since the Complainants are asking the Commission to order Ameren Missouri to charge Noranda a rate that is not based on the utility’s cost to serve that customer, they bear the burden of proving that such a subsidized rate is just and reasonable and is not an undue or unreasonable preference to a particular customer.

“The Complainants have not carried that burden.”

After the commission denied the rate-change request in August, the company said it would have to lay off up to 200 of its nearly 900 employees.

After the formal hearings in June, but before the PSC issued its order, Missouri’s Public Counsel’s office proposed an alternate rate-change idea that would reduce Noranda’s rate by about 16 percent and raise other customers’ rates by only about 1 percent.

Gov. Jay Nixon and most of the lawmakers from Southeast Missouri also backed the idea.

Before casting last week’s vote against rehearing the rate-change request, commissioners again noted the parties still could reach a compromise as part of Ameren’s new rate case, which the PSC must decide by next May.

But Noranda spokesman John Parker said that “will likely be too late for the 125 to 200 employees whose jobs will be lost based on the PSC’s decision.”

And state Sen. Doug Libla, R-Poplar Bluff, said in a news release: “The PSC missed yet another opportunity to do something crucial for our rural economy, especially for Southeast Missouri.

“This lack of leadership for Missouri ratepayers by the PSC and Governor Nixon is frustrating. We need urgent action now by the Governor to protect these jobs, families, and communities.

“This lackluster effort and reasoning is both puzzling and very disappointing.”

State Sen. Jason Holsman, D-Kansas City, also weighed in, sending commissioners a copy of a Sept. 24 story from an American Metal Market publication, reporting that Niagara Worldwide won’t re-open a smelter it bought in Ohio, because of an “electricity rate (that) is simply too high.”

Holsman also urged the PSC to rehear the rate change request, “allowing Noranda to operate for years to come.”

Commissioners have said, repeatedly, that economic development isn’t their responsibility.

In August they wrote: “A request for an economic development subsidy of this magnitude is more properly directed to the Missouri General Assembly.”

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Editorial: Undermining Obamacare Won’t Hide Its Success

St. Louis Post-Dispatch, October 6, 2014

As part of their guerrilla war on Obamacare, Missouri lawmakers not only have failed to pass Medicaid expansion, but have forbidden state insurance regulators from reviewing proposed prices and other details about health plans on the federal health exchange.

That means thousands of Missourians must shop for coverage without the information they need to make informed decisions.

What a terribly cynical and mean-spirited thing to do in the name of serving the public.

Missouri is one of only a few states that does not reviewhealth insurance rates. Potential health care customers here don’t know which companies are offering plans in their areas, what benefit options are available to them or how much it will all cost.

The Consumers Council of Missouri, an advocacy group, has now sued the federal government to try to force public disclosure of health insurance rate information ahead of the upcoming enrollment period beginning Nov. 15.

The group made a Freedom of Information Act request for the rate filings, which was denied by the U.S. Department of Health and Human Services. The council told the Post-Dispatch’s Jordan Shapiro that it wants information about pricing and explanations for why insurers changed rates.

In many states, consumers don’t need federal help to get rate information because the details are made public by state insurance regulators who have authority to review an insurer’s proposed prices for health plans.

The consumer group says Obamacare requires federal officials to make rate information public so consumers can challenge the price of health insurance before they begin online shopping. The Health and Human Services Department division that runs the online marketplace has yet to release information about proposed rates or the identity of insurers who have applied to offer plans in Missouri.

A spokesman for HHS told Mr. Shapiro that the department is preparing the information and plans to release it, but did not say when.

Polls, surveys and statistics from independent research organizations, including the Commonwealth Fund, Gallup, the Rand Corp., the Kaiser Foundation and the Urban Institute, show that the federal health care plan is meeting many of its goals. Among them:

• More people have health insurance.

• People with health insurance are better off, with less financial distress and fitter mental health.

• Many people paid less for insurance this year than last year.

• Marketplace premiums are barely rising, and employer-sponsored premiums rose about 3 percent this year, similar to past years.

• Overall health care costs are rising at historically low rates.

• The federal deficit is down because money spent on health care has been offset either by new revenue or new spending cuts.

• The law exposed the nearly $3.5 billion in incentives that drug and medical device companies paid doctors and hospitals for part of last year. An initiative called Open Payments spotlights potential ethical conflicts. Consumer groups say such incentives can influence prescribing decisions, the use of high-tech tests and types of surgeries performed.

Missouri lawmakers must stop treating the poor and working poor like second-class citizens — or worse. All Americans are entitled to the information they need to make informed and critical decisions about health care. Hiding it won’t hide the truth: President Barack Obama’s signature health care achievement is working.

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Settlement with Bank of $16.6 Million Expected to Benefit Minority Consumers

St. Louis Post-Dispatch, October 2, 2014

Midland States Banks said it will open a branch and loan production office in the St. Louis region as part of a settlement of a fair housing complaint that sought to block its acquisition of Heartland Bank.

Effingham, Ill.-based Midland States Bank announced Thursday it will open a new local branch in a predominantly minority community in the city of St. Louis, a loan office in the St. Louis region and a branch in Joliet, Ill. The bank also committed $16.6 million to increase access to home mortgage products including refinancing and multi-family lending in predominantly minority communities in St. Louis and Joliet.

The locations of the St. Louis area branch and loan production office have not yet been identified, said Douglas Tucker, senior vice president and general counsel of the bank’s holding company, Midland States Bancorp. The bank’s local branches are in Chesterfield, Columbia, Ill., and Waterloo, Ill.

Several national and local organizations, including the St. Louis Equal Housing and Community Reinvestment Alliance (SLEHCRA), filed a complaint a year ago with the U.S. Department of Housing and Urban Development, alleging Midland States Bank did not provide equal services to black borrowers in violation of federal law. The complaint alleged black mortgage applicants made up just 0.39 percent of all applicants at the bank, based on an analysis of federal racial lending reports. The low numbers constituted redlining, a practice of refusing to lend in minority areas, which is prohibited by federal rules, according to the complaint. The National Community Reinvestment Coalition and the Woodstock Institute joined with SLEHCRA to file the complaint.

“I can already visualize the changes in St. Louis due to agreements like the agreement we now have with Midland States Bank to reinvigorate our communities, to put in investment where needed to provide low income individuals the access to credit,” said Ed Wartts, director of the U.S. Department of Housing and Urban Development’s fair housing and urban equal opportunity office in St. Louis. “Banking is a fundamental foundation of any community and without it, communities fail to thrive, they fail to grow.”

The settlement announced Thursday paves the way for Midland States Bank’s acquisition of Clayton-based Heartland Bank, announced last September, to move forward. Heartland has 13 branches and is among the largest locally chartered banks with $870 million assets at mid-year, according to the Federal Reserve Bank of St. Louis.

“We were concerned with Midland States Banks’ record of lending to minority communities in St. Louis as well as other areas in Illinois,” said Elisabeth Risch, director of research and education at the Metropolitan St. Louis Equal Housing Opportunity Council, a nonprofit housing organization that is a member of the alliance that lodged the complaint.

The alliance made the announcement on an undeveloped lot in the 5900 block of Dr. Martin Luther King Drive. The site was chosen because the zip code where the lot is located, 63113, has only one bank branch, and an adjoining zip code, 63113, has no bank branches. Combined, the two bank branches have a population of 33,000, of which 80 percent is black, Risch said.

“The agreement announced today with Midland States Bank represents the ongoing efforts by SLEHCRA and our partners to increase investment in low income communities and minority communities,” Risch said.

Midland States Bank’s Tucker said the acquisition of Heartland Bank is expected to close soon. “We’re hoping we will be able to close in the next month or two,” Tucker said.

Regarding the settlement, Tucker said Midland States Bank looks forward to working with the local nonprofit groups to identify sites for the new branch and loan production office. “We try to be a leader in every community that we’re in and we fully expect to be a leader in the economic development here in St. Louis.”

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Consumers Council Sues to Make Public Health Insurance Rate Information

St. Louis Post-Dispatch, October 2, 2014

A Missouri consumer advocacy group is suing the federal government in an attempt to force the public disclosure of health insurance rate information ahead of the upcoming enrollment period.

The Consumers Council of Missouri said it filed the lawsuit late Tuesday in U.S. District Court in St. Louis after its Freedom of Information Act request for the rate filings was denied by the U.S. Department of Health and Human Services. The council said it is looking for information about pricing and insurers’ reasons for raising or lowering rates.

“It seems to be the only way we are going to have a chance to get this information,” said Joan Bray, the council’s executive director and a former Democratic Missouri state senator.

The consumer group says the Affordable Care Act requires federal officials to make rate information public so consumers have the chance to challenge the price of health insurance before online shopping begins on Nov. 15.

For many states, that role can be performed by state insurance regulators who have the ability to review an insurer’s proposed prices for health plans.

But Missouri’s insurance department has no such authority, leaving the federal government as the only entity — other than the insurers themselves — with access to rate information before the plans are sold.

The Centers for Medicare and Medicaid Services, the division of the Health and Human Services Department (HHS) that runs the online marketplace, has yet to release any information about proposed rates or the identity of the insurers who have applied to sell on the Missouri marketplace.

A spokesman, asked about the Missouri lawsuit, told the Post-Dispatch that it plans to release the information but did not say how soon.

“We are readying the rate change information. The department is committed to providing consumers accurate information so they can make informed decisions, and therefore, before the beginning of open enrollment, the agency will publish final insurance rates for all 50 states,” HHS spokesman Ben Wakana said in a statement late Wednesday.

Jay Angoff, the attorney filing the lawsuit on behalf of the consumer group and a former Missouri insurance commissioner, said it could be some time before a judge considers the case. With open enrollment starting in about six weeks, there may not be enough time for a court ruling before people begin signing up for plans, he acknowledged.

But Angoff said he hoped the lawsuit would send a message that federal officials should be more transparent about rate information.

Tim McBride, a health policy professor at Washington University, said he thinks it would be better to have more rate information available but that insurance shoppers will have enough time to carefully consider their options during the four-month enrollment period.

“People need to know a lot of information to make decisions as to why rates are going up or down and the rationale behind it,” he said.

McBride added that federal officials and insurers could be keeping pricing information quiet for competitive reasons.

The lawsuit underscores the increasing importance of rate review as more and more Americans sign up for health insurance coverage using HealthCare.gov, the online marketplace.

Because Missouri is one of the few states that doesn’t review health insurance rates, many customers will learn about pricing and benefit options on Nov. 15 when the next enrollment begins.

Many won’t know which companies will be offering plans in their areas.

The two insurers who sold plans last year — Anthem Blue Cross Blue Shield of Missouri and Coventry Healthcare — are expected to continue offering coverage, and two additional companies have publicly announced they plan to join the fold this year.

But there is no way to tell if other companies are preparing to offer plans or if an insurer will be offering coverage in all parts of the state.

Bray said the lack of information puts Missourians at a disadvantage compared to residents of other states where insurance information is available before the start of enrollment.

“I don’t believe Missourians should be second-class citizens under the Affordable Care Act,” she said.

Andrea Routh, the executive director of the Missouri Health Advocacy Alliance, called the lawsuit good news for Missouri consumers.

“Part of the premise around the Affordable Care Act is we are going to empower consumers to make good purchasing decisions,” she said. “To do that they have got to be able to see the rate and have somebody asking questions about them.”

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