Bill would make it easier to raise electricity rates

JEFFERSON CITY, Mo. -- It's a battle that has pitted big business against big utility companies, but Republican lawmakers think they've found a solution.

The problem with their solution, critics say, is that consumers still could feel the pinch of higher electric bills without the usual checks and balances utilities must endure.

Legislation that has won initial approval in the Senate would help electric companies more quickly and easily recoup their costs for buying fuel.

Also, electric, natural gas and water companies could more quickly pass on to consumers the costs for adhering to environmental laws. The legislation also would allow gas companies to raise rates to account for changes in customer usage caused by the weather.

The bill would give the Public Service Commission broad discretion in devising the process to let companies adjust their rates as circumstances warrant.

"It offers greater flexibility," said Ameren spokeswoman Susan Gallagher. "It means that instead of folks paying what would be estimated costs, they're paying actual costs. It's true that if fuel goes up, the bill would then go up, but it also goes down if, in fact, fuel costs go down."

Now, when an electric company wants to raise its rates, it generally must undergo a rate hearing with the commission.

The bill would require a company to undergo a rate hearing before the commission decides whether to allow it to change rates. But once the commission signs off on the plan, the utility could raise or lower rates as it deemed necessary, going back to the commission simply to show the change in fuel costs.

"Those rates can fluctuate upward even if the cost of doing business all around was going down," said John Coffman, head of the Office of Public Counsel, which represents consumer interests in utility cases. "There would potentially be more volatility."

Such rate surcharges occurred in Missouri decades ago, but the Missouri Supreme Court ruled in 1979 that the charges weren't allowed because they didn't consider the company's entire financial picture.

Electric companies have tried before to reverse the court's decision, but may see a better opportunity this year, with business-friendly Republicans controlling the executive and legislative branches for the first time in eight decades.

Supporters say the bill is needed to ensure the state has adequate power supplies in the future, and would encourage companies to build more power plants.

"From the consumer's standpoint, it's one thing to say we need to ensure costs are contained. Sometimes the consumer forgets just what all has to happen when a light switch is turned on," said sponsoring Sen. John Griesheimer, R-Washington. "Not only are we trying to keep costs down, but we're trying to plan for the future."

Griesheimer said the legislation now has several provisions to protect consumers, including an annual review to determine if rates are too high or low and a full hearing to set new rates within four years after a surcharge plan is approved.

Several of Missouri's larger companies, which buy huge quantities of electricity, initially fought the bill, worrying it would have a negative effect on the state's business climate. But with the added consumer protections, they've backed off.

"The exposure in the original bill was so huge, we feel like this compromise is a big improvement," said Diana Vuylsteke, an attorney representing companies including Anheuser-Busch Cos. Inc., Boeing Co., Ford Motor Co. and Monsanto Co.

Still, those worried about residential customers said their views aren't being considered.

"The average consumer is not represented in this bill, the one whose rates will go up," said Sen. Joan Bray, D-St. Louis.

"We have very healthy utilities in general, very well-run, very good returns and at the same time we have low utility costs to the consumers," she said. "It seems to me like we have a really good situation in Missouri now. And yet somebody's seeking to change the balance."

Electric rate bill is SB179.