The Missouri legislature passed a major utility bill on Thursday that makes sweeping changes to how utilities operate in Missouri.
SB 4, which is now headed to Gov. Mike Kehoe for a signature, contains dozens of policies. Some affect the way utilities are allowed to bill customers. Others increase protections for customers.
Utility companies support the bill and its policy changes. They say more power plants are needed to meet expected increases in demand for energy.
The bill is about reliability, affordability and “positioning Missouri to win some major economic development opportunities we now have at our doorstep that, frankly, we're competing with other states to try to bring to Missouri,” said Warren Wood, regulatory vice president for Ameren Missouri.
But SB 4 has many critics who say Missouri doesn’t have that demand for energy and contend the bill will significantly increase costs of utilities for customers.
Environmental advocacy groups also say it disproportionately favors fossil fuels like natural gas, which is primarily made of methane, over renewable energy sources like wind and solar.
“There are ways for us to have a reliable grid that do not rely on giving corporate welfare to monopoly utilities,” said Gretchen Waddell Barwick, chapter director of the Missouri Sierra Club. “We can invest in energy efficiency. We can look at battery storage.”
St. Louis Public Radio asked the bill’s advocates and critics how some of the most consequential new policies will work.
1. Construction work in progress
- The change would allow utility companies to charge customers for power plants while they are being constructed. Under current policy, utilities build projects and ask Missouri regulators to increase rates after the projects are finished.
- Opponents say that this will cause increases in bills and out-of-control spending by utility companies and that customers shouldn’t have to front the cost of projects when investors have historically been willing to pay for the construction. “They're basically taking out a loan with you that you did not consent to,” said Elyse Schaeffer, policy coordinator at Missouri Coalition for the Environment.
- Supporters say the bill will actually limit costs because the utility will not have to pay interest on loans to build. “[It’s] like using a credit card to pay a credit card to pay a credit card,” Ameren’s Wood said. “Nobody should be doing that. But over multiple years of building a power plant, some of that can occur with a financing cost.”
2. Future test year
- This would allow water and gas utilities to base their customers’ rates on projected costs rather than actual costs that have already happened.
- Supporters say this helps utilities plan ahead.
- Opponents say rates should be based on real data. “We're very concerned about that because that would not include actual, audited costs,” said Sandra Padgett, executive director of the Consumers Council of Missouri.
3. How utilities plan for the future
- Investor-owned monopoly utilities create plans for the coming years, which they submit to Missouri’s utility regulators. This section of the bill changes the process for creating these plans. It also allows companies to charge customers for power plants as they’re being built if those plants are approved in this process.
- Supporters say this will allow more public feedback and streamline the approval of new power plants. “Now it becomes a stakeholder process that actually yields decisions that all the parties can understand,” Ameren’s Wood said.
- Opposition skepticism: “When we intervene in cases at the Public Service Commission, we have a seat at the table,” Padgett said. “When we testify at local public hearings, we can provide input. So I'm not sure what this bill does beyond what is already available to us.”
4. Closure of electric power plants
- This requires electric utilities that are closing a power plant to replace it with a similar-size “dispatchable” energy plant, effectively coal, nuclear or natural gas power plants. Of those options, natural gas is most likely to be built.
- “This is a huge problem because it absolutely does not take into account changes in our technology, changes in the cost of what it costs to get nuclear or coal or natural gas. It does not take into account the environment, anything like that, and there's no sunset on it,” said the Sierra Club’s Waddell Barwick.
- Supporters say the definition of dispatchable energy could also include batteries that are storing power from renewable resources like wind and solar.
5. Increased funding to the Office of Public Counsel
- The Office of the Public Counsel represents the public in matters involving monopoly utilities in the state. This change would increase funding for the office by having utilities pay for the work the public counsel expects to do in a year related to their companies.
- This section of the bill is broadly supported, but critics of the bill say it does not outweigh the overall harm of the legislation.
6. Special rates for utility-burdened customers
- This allows utilities to give discounted rates to customers who are paying a disproportionately high percentage of their income on utilities. Low-income St. Louisans pay more for utilities than their wealthier counterparts, and majority-Black parts of the region are more likely to experience utility burden, according to a recently released report from the Sierra Club, Renew Missouri and the Consumers Council of Missouri.
- This section of the bill is broadly supported, but critics of the bill say it does not outweigh the overall harm of the legislation.
7. Advanced meters
- Advanced or hub meters record information about consumption of energy and communicate that with the utility provider. This part of the bill changes how customers can opt out of smart meters, limiting the monthly fee to opt out to no more than $15 and a one-time fee to no more than $125.
- Supporters say this lowers the cost for customers who do not want a smart meter.
- Opponents offer different reasons. James Owen of Renew Missouri supports the widespread adoption of smart meters, which he says helps utilities manage demand and consumption. “I think that a lot of the fear and concern about smart meters is driven a lot by misinformation, disinformation,” Owen said. “I think it's unfortunate that we're making it easier for people to opt out of it.”
8. Time-of-use rates
- Time-of-use rates change the price of energy during high-demand time periods, like the evening, when a lot of people are at home and using appliances. This policy allows customers to opt out of those rates. Ameren customers do not have mandated time-of-use rates and are already able to opt out.
- Critics say opting out is often confusing for customers who sometimes don't realize they have been moved to this type of billing. Padgett of the Consumers Council of Missouri said customers should have to opt in instead.
9. Hot and cold rule changes
- This change gives customers a longer time frame before companies can disconnect their service during extreme weather — expanding it to 72 hours from 24. Currently, utilities are not allowed to shut off service for 24 hours after a temperature is predicted to fall below 32 degrees or above 95 degrees.
- This section of the bill is broadly supported. “Having a longer period where your access to air conditioning is protected is really essential to help keep people's homes at a livable temperature when it is extremely hot outside,” said Schaeffer of the Missouri Coalition for the Environment.
Read the full text of the bill and information on the legislature’s actions on it here.
This story has been updated to clarify information for customers.
