Dive Brief:
- The St. Louis Post-Dispatch reports state Sen. Ed Emery (R) has prefiled testimony in Missouri's legislature that would make changes to how utility power rates are set, with an eye towards spurring investment in the electric grid.
- The measure also includes lower rates for large industrial customers, aimed at benefiting a lead mining company.
- A similar measure failed to advance in the last legislative session, but Ameren Missouri told state regulators this fall that it is not moving ahead with $1 billion in infrastructure improvements due to the ratesetting process and difficulties in recouping the investments.
Dive Insight:
Missouri lawmakers are gearing up for a familiar fight, trying to spur investment in the electric grid while also supporting industry and keeping power rates low and fair. While Emery told the Post-Dispatch that the latest version of his bill is less expansive than previous proposals, opponents say it's much the same.
John Coffman, an attorney for the Consumers Council of Missouri, told the newspaper "it's a bag of accounting tricks."
The bill proposed last session would have made rate increases largely formulaic. Backed by Ameren, the proposal would have allowed utilities to set rates based on prior-year's costs, speeding the company's ability to invest in and modernize the distribution grid. Included in the bill were rate breaks for Noranda Aluminum, but the company went bankrupt—taking with it some of the urgency that had surrounded debate over the bill. The new bill would include lower rates for another company, however, mining company Doe Run.
Ameren Missouri earns a 9.53% return on its investments, but previous proposals would have lowered its rate of return to 9.45%, with the possibility of increases pegged to benchmarks. The utility has indicated it wants to undertake grid modernization projects between 2018 and 2022, including substation upgrades, replacing power cables and a smart meter program, but cannot move forward until the ratemaking process has been changed.
"The regulatory lag built into Missouri’s decades-old rate setting process prevents full recovery of the cost of these investments and other elements of Ameren Missouri’s costs to serve its customers,” utility officials said in a September filing.