SB564: The FACTS

The Consumers Council of Missouri would like to offer the residential consumer perspective of Senate Bill 564.

Consumers Council of Missouri is the only state-wide organization that advocates on behalf of residential consumers, your constituents, before the Public Service Commission as well as the state legislature. Our goal is simple: to protect Missouri consumers, their best interests and their pocketbooks.

SB564 is a huge blow to rate payers. This bill was House Committee written by Ameren and makes it easier for monopoly investor-owned utility companies to raise rates and shifts the cost burden from our state’s largest energy users to its smallest.

Supporters point to “rate caps” but the bill also includes an expansive force majeure, which means that the cost of any major event including common weather events like tornados and ice storms are excluded from the caps. With exceptions as broad as these, the caps are meaningless.

This bill will no doubt raise rates for your constituents. In fact, our experts estimate that the impact on ratepayers will be increases up to 20% through several new complicated mechanisms, despite the “caps”.

First, and most significantly, SB564 allows for a new accounting system which allows profits to be easily added into rates. Missouri would become a guinea pig, the first state in the country to adopt the “Plant in Service Accounting,” PISA, “bonus accounting” mechanism. PISA allows the utility to go back in time when accounting for costs, essentially allowing for profits to be calculated as though incremental rates were implemented between rate cases.

Secondly, the bill allows for rates to go up as usage goes down, through a mechanism called “decoupling.” This inverse incentive to conserve energy hits hardest the smallest users among us and is an unfair burden for our state’s elderly and people on fixed incomes.

And lastly, SB564 includes economic development subsidies for our state’s largest users, upwards of 40%. This will shift the burden of paying utility costs and profits from industrial energy users onto our state’s smallest residential customers.

While Ameren claims that passage of this bill will result in $200M additional infrastructure, nowhere in this bill is Ameren or any other utility required to make such investments. On top of that, such investments may not be cost effective, leaving ratepayers holding the bag on costly projects that don’t smartly improve the grid.

As you consider this bill, please remember your constituents, those hit hardest by the increases this bill will allow. As Missouri’s only state-wide organization focused on protecting Missouri ratepayers, Consumers Council is here as a resource and to answer questions from the consumer perspective.

Cara Spencer, executive director 314-556-7379