In last week’s column, I discussed my ongoing fight to protect Missourians from experiencing undue hardship at the hands of our various utility companies. Year after year, the water, gas and electric monopolies have attempted to find new ways to more easily raise rates on Missouri consumers, and 2016 has been no different. This week, the Missouri Senate spent an extended amount of time debating three utility measures.
From a financial perspective, Missouri’s utility corporations are healthy. Missouri’s utility companies are experiencing tremendous growth in stock prices with some seeing them double or even triple. Consumers enjoy some of the lowest rates in the country (we have the seventh lowest electric rates) while our utilities continue to turn a profit for themselves and their stockholders. Case in point: the average Missouri household income is roughly $50,000, while the CEO of the state’s largest investor-owned electric company made just under $6.5 million in 2015. And that is precisely why, during Tuesday’s more than six hours of debate, I took a very active role in explaining to my Senate colleagues why there is no reason our utility companies should once again be asking for permission to make even more money at the literal expense of Missouri’s hardworking citizens and their families.
To add insult to injury, these utilities are using the Legislature to circumvent the Missouri Public Service Commission (PSC), which exists to regulate privately owned utilities and see that our citizens receive safe and reliable services at fair and reasonable rates. It serves as a counterbalance to utility corporations, who have the benefit of operating as natural monopolies because the necessary infrastructure is so expensive. Currently, Missouri’s utility companies must present their case before the PSC if they want to raise rates. This vetting process is absolutely critical to ensuring they can justify any rate increase, preventing wasteful spending and protecting consumer rates. Unsurprisingly, sometimes they can’t.
House Bill 1717 is this session’s water utility bill. Among other provisions, it would allow Missouri’s water and sewer corporations to implement a rate “revenue” stabilization mechanism, essentially removing the PSC’s oversight ability in determining rate adjustments and replacing it with a formula that guarantees an annual rate increase, even in years when it isn’t necessary to cover operating expenses.
It was just two months ago that Missouri’s largest water and sewer company appeared before the PSC and agreed in a settlement to drop its controversial revenue adjustment proposal and cut its rate increase request by 40 percent. The settlement came on the heels of a problem uncovered by regulators — a problem the utility never disclosed during more than six months of rate case proceedings. It was discovered that thousands of meters weren’t recording total water usage by either under-recording or simply not recording. As a result, some residential consumers were being billed the full amount, while their neighbors a few houses down were being billed considerably less or not at all.
From faulty metering to inappropriate handling of sewer systems, this utility company clearly doesn’t have its house in order. Despite the fact the PSC has identified these problems and already determined the rate stabilization method is not appropriate at this time, the water utility has come to the Legislature hoping for a different outcome. House Bill 1717 is little more than a blatant attempt to bypass the objective external oversight of the PSC.
House Bill 1804 is a gas utility bill that seeks to extend the amount of a time a gas corporation can collect an Infrastructure System Replacement Surcharge (ISRS), which is meant to be a temporary funding solution that gas corporations may apply for in order to more quickly recover unexpected costs, such as emergency repairs due to a natural disaster.
Right now, two Missouri gas corporations have had formal complaints filed against them by the Missouri Office of the Public Counsel (OPC) for overearning. Additionally, both companies currently collect millions of dollars from consumers through their ISRSs. The OPC’s complaint states that without PSC action culminating in a rate reduction, these gas companies will likely “continue charging and collecting unjust and unreasonable rates from customers through the overearnings as well as the improper adjustments to their respective ISRS matters.” If passed, HB 1804 would allow these same gas corporations to extend their ISRSs from three to five years, also extending the amount of time they could go without having to make their case before the PSC.
The last utility measure is House Bill 2689, which proposes a new state energy plan that would drastically restructure the way electric rates are determined. Missouri’s current energy plan has been serving us well for a century. While I am certainly not opposed to making improvements if and when they are needed, as a matter that will most directly impact the average Missouri citizen, I am not willing to throw caution to the wind in order to appease utility corporations and their stockholders.
Regardless of how supporters try to paint the situation, the primary driver of HB 2689 is the fact that more energy-efficient processes and devices are resulting in decreased consumption — and this is across all utilities, not just electric. While this trend has been financially beneficial for consumers and great for conservation efforts, it has translated to falling profits for utilities, and they are now looking for ways to get back into that growth mode.
The bottom line is before we overturn our current energy policy and regulatory environment, we must fully vet what is being proposed and understand it, and three months is not long enough to conduct a thorough study. House Bill 2689 is simply too much too fast.
I have always viewed the relationship between consumers, utilities and the PSC as a three-legged stool; each leg is essential for overall success. Unfortunately, as we have seen in the three bills I just described, Missouri’s utility corporations are trying to sabotage that success by punishing consumers through increased rates and bypassing the PSC to get what they want, all so they line their pockets and please their shareholders.
As of today, HB 1717, HB 1804 and HB 2689 are currently on the Senate informal calendar; however, should they be brought up for further consideration, I will continue speaking against them until everyone understands what is truly at stake.
Finally, I was delighted to meet with a number of individuals from the district this week, including: Keith, Sheri, Dylan and Kailyn George, of Farmington; Madeleine Castle with St. Louis Teen Eagles; and Mike Millikan. From South Iron R-I High School in Annapolis, I met with educator Lyndal Jenkins; Mary Beth Middleton, who was chaperoning; and high school juniors: Kaden Brewer, LaRon Cornell, Mariah Hickson, Kallie Middleton, Landon Ruble, Sam Ivy, Hannah Kenyon, Rachel Chitwood, Alpine Brooks and Cassie Lange.
Contact Me
I always appreciate hearing your comments, opinions and concerns. Please feel free to contact me in Jefferson City at (573) 751-4008. You may write me at Gary Romine, Missouri Senate, State Capitol, Jefferson City, MO 65101; or email me at gary.romine@senate.mo.gov; or www.senate.mo.gov/romine.