Electric ‘surcharge’ debate heats up over new PSC analysis
Tuesday, April 9, 2013
Missouri’s Public Service Commission last week provided answers to state Sen. Eric Schmitt, R-Glendale, on six questions he asked about the proposed electric utility surcharge bill awaiting legislative debate.
Those answers — in an 18-page report — were released Monday.
Among its findings, the PSC staff said: “(The) process would almost always accelerate charging of costs associated with plant additions to customers in comparison to when such costs might be included in their rates under traditional rate regulation.”
The staff also noted that the current rate-making process can “cost the utlity some amount of money,” and that the proposed law “would remove some of the negative regulatory lag from the ratemaking process.”
Each side in the debate claimed the PSC supported its position.
“If Senate Bill 207 is passed, Missourians’ electric bills would increase by $600 million over the next four years,” the group Fair Energy Rate Action Fund (FERAF) said.
But Irl Scissors, of Missourians for a Balanced Energy Future, said: “The report reaffirmed what we have said all along.
“It reaffirms the Feb. 25th PSC Staff report that there is no substantive difference in customer cost between (the surcharge) or the normal rate process.”
Two bills, sponsored by state Rep. Jeanie Riddle, R-Mokane, and Sen. Mike Kehoe, R-Jefferson City, would give Missouri’s three investor-owned electric companies the authority to make repairs and improvements to their production and distribution systems and equipment — and pass that charge on to customers’ bills even before the PSC has a full rate hearing on the work.
On Monday, Kehoe said the bills aren’t dead, even though they have yet to be debated in either the House or Senate.
“There’s lots of conversations going on,” he said. “We’ll continue to talk about it, and see what we can do to make the bill a little bit more palatable for both groups.
“I think, in the next two or three weeks we’ll probably need to be debating it.”
State senators spent close to two hours Monday evening debating, then giving first-round approval to a bill that would allow investor-owned water companies throughout Missouri the same surcharge authority that companies in St. Louis County have had for nearly a decade.
Senate President Pro Tem Tom Dempsey, R-St. Charles, noted some of the issues are the same.
But former state Sen. Joan Bray, now head of the Consumers Council of Missouri, said the electric utlities “have never even tried to make a case that there’s a desperate need to rush projects” with a surcharge.
She said the three companies — AmerenMissouri, KCP&L and Empire Electric — all tell the PSC in their current rate cases “they are providing very reliable and safe service in all their areas ... and they got to this point (through) the general rate-making process.”
However, Scissors said: “Missouri needs to upgrade its electrical grid for many reasons ... the recently released Brattle study showed that for every $1 invested in energy infrastructure, customers would benefit more than a $1.50.”
He said that allowing the surcharge provides “an investment in infrastructure and new jobs.”
Both he and John Hancock, spokesman for the Missouri Electric Alliance group formed by the three regulated companies, argued that customers benefit in the long run because the companies don’t have to borrow money between the rate cases, so consumers’ long-term costs are lower.
But Chris Roepe, FERAF’s director, said the PSC’s “unbiased analysis shows this legislation to be little more than a money grab by Missouri utilities. This isn’t good public policy.”
Dempsey said he supports the surcharge idea, but the Senate debate will be successful only if Kehoe can work out a compromise between the sides.
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