Dive Brief:
- A plan to overhaul how utility rates are set in Missouri could lead to massive price increases across the next decade, a representative from the Public Service Commission told lawmakers last week, St. Louis Post-Dispatch reports.
- At a hearing before the House Energy and the Environment Committee, lawmakers also heard from Noranda Aluminum, who said its 900-employee facility could potentially be restarted under the rate proposal being considered.
- The measure, backed by Ameren, would allow utilities to set rates based on prior-year's costs, speeding the company's ability to invest in and modernize the distribution grid.
Dive Insight:
The St. Louis Post-Dispatch reports Ameren's plan to shorten the time rate cases take appears to have dubious support, with regulators warning of the potential for significant rate hikes.
Missouri Public Service Commission Staff Director Natelle Dietrich told the House committee that the new rate-setting procedure would be a “radical departure” from the status quo, potentially resulting in a 62% rate hike for residential customers over the next decade. Other large industrial customers could see rates go up from 50% to 90%, she said.
Under the new proposal, utilities would be allowed to set rates based on last year's expenses. Ameren Missouri currently earns a 9.53% return; the proposed return in the legislation is 9.45%, but if the utility meets certain goals, the rate could be higher.
Ameren and Noranda are also pointing to jobs as a central factor. They claimed that policies adopted domestically and internationally have made the smelter's energy costs uncompetitive. That argument may be resonating with lawmakers, the Post-Dispatch reported.
“I know that the loss of your company will be very devastating for that region,” Rep. Margo McNeil (D) said during the hearing.
But other large consumers say that while the current system of ratemaking is lengthy and imperfect, it empowers regulators to keep prices in check. “Toss this bill on the scrap heap," Steve Spinner, representing the Missouri Industrial Energy Consumers, told the committee.
