The Missouri Legislature considers a handful of bills each session relating to our various utilities like water, electric and gas. These measures are often complex in nature, and it can be easy to get bogged down in the minutiae of ratemaking and kilowatts. As they say, however, the devil is in the details, which is why it is so important for state lawmakers to understand a bill’s finer points as well as its broader implications.
Every year and without fail, utility companies attempt to find new ways to more easily raise rates on Missouri consumers. While much of the need to do so stems from the rising costs of maintaining and improving our various utility infrastructures, it’s important for consumers to remember that at the end of the day these privately owned utilities must answer to their stockholders. One way they have often tried to raise rates is by supporting legislation that would allow them to bypass the Missouri Public Service Commission (PSC).
The PSC exists to regulate investor-owned utilities and ensure our citizens receive safe and reliable utility services at fair and reasonable rates. To adjust rates, an investor-owned utility must go through the general ratemaking procedure with the PSC. This includes hearing dates and public comment opportunities. This critical vetting process allows the PSC to verify that utility corporations can truly justify any rate increase, preventing wasteful spending and protecting consumer rates.
When considering a utilities bill, I am always looking for balance between the interests of utility corporations, which employ thousands of Missouri citizens with good jobs, and consumers, who feel the effects of every single rate increase. Unfortunately, I don’t believe there is a bill fitting that description this session. In fact, one piece of legislation that is still advancing through the process contains some very unbalanced provisions.
Utility corporations have the benefit of operating as monopolies because the infrastructure needed to generate and deliver water or electricity is enormously expensive; however, in exchange for a being a monopoly, they agree to certain regulations and objective external oversight. The legislation currently under consideration takes all the risk away from the utilities and places it on consumers by removing the PSC’s oversight ability in determining rate increases and replacing it with a formula that guarantees an annual rate increase.
Proponents argue this move will provide customers with more predictable rates. And while predictability is generally a good quality, in this case it would mean customers could predictably expect a rate increase even in years when it isn’t necessary to cover operating expenses. My chief concern is this legislation is more about driving up stockholder dividends than improving and maintaining our utility infrastructures and power grids. This concern isn’t unfounded.
Just this week, the Missouri Office of the Public Counsel (OPC) filed a formal complaint against two Missouri gas corporations. The complaint states that both companies have enjoyed actual returns on equity that significantly exceed what state utility commissions previously determined as reasonable for 2015. Additionally, both companies currently collect millions of dollars from consumers through their Infrastructure System Replacement Surcharges (ISRS).
An ISRS is meant to be a temporary funding solution that investor-owned gas corporations may apply for in order to more quickly recover unexpected costs that go above and beyond their usual budgetary planning, such as emergency repairs due to a natural disaster. Perhaps unsurprisingly, ISRSs have become less temporary and more permanent in recent years. The OPC’s complaint goes on to claim 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.”
Many Missouri families live paycheck to paycheck, but these large utility corporations do not. While it is imperative that our utilities function safely and efficiently, I do not believe it is right to expect the public to bear higher costs than what is necessary — especially just so stockholders can line their pockets a little more.
Throughout my time in the Senate, I have been working hard behind the scenes to protect Missourians from undue hardship brought about by bad policy. During my very first session, I helped stop a water utility bill on its last leg of the legislative process because it would have had some very real, negative consequences for consumers. Just like I said earlier, once I was able to explain what the bill would actually do — those finer details — my fellow senators agreed it was not right for Missouri. Three years later, I’m still fighting to prevent the same type of harmful legislation from becoming law, and I assure you I will continue fighting to protect Missouri consumers for as long as I’m in office.
I was pleased to meet with the following residents from back home this week: Dennis Atkins and Rhonda Payne with Disabled Citizens Alliance for Independence; Dr. Mike Redlich from Southern Reynolds County R-II; Mr. John Eaton from Bunker R-III; Lisa Umfleet; Marge Hinkebein; and Betty Weiderholt. Thank you to everyone who stopped by.
Finally, this week, my staff and I (and I think it’s safe to say the entire Senate) were very happy to welcome back Chris Schillinger and crew from Baylee Jo’s BBQ Seafood & Grill in Ironton. This is now the eighth year Chris and his staff have brought their amazing barbeque to the Capitol. I know our Senate family always looks forward to seeing the folks from Baylee Jo’s, and I thank them for making the drive up to Jefferson City.
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.