The Fair Energy Rate Action Fund (FERAF) today announced its opposition to a new surcharge on electric bills being proposed in legislation being pushed by Missouri utilities. The new surcharge in SB 207 would cover everything from transmission to new energy generation.
An analysis by FERAF shows that if this surcharge had been in place since 2007, it would have cost Ameren Missouri consumers at a minimum an additional $200 million on their electric bills above and beyond what they already paid. This doesn’t include how much more business and residential customers would have paid to the other investor owned utilities.
This proposed surcharge comes on the heels of historic rate increases in Missouri. From 2006 to the end of 2013 customers served by Ameren will have paid roughly $2.8 billion more to the company due to the fuel surcharge passed by legislators and a series of rate hikes approved by the Public Service Commission.
This current proposal would make it even easier for investor-owned utilities to raise rates on Missourians by bypassing the traditional ratemaking process and instead engaging in single-issue ratemaking. Single-issue ratemaking causes rates to rise dramatically because it only allows regulators to consider costs by utilities in a single area, like infrastructure, as opposed to considering all factors, including possible areas of savings, as in a traditional rate case.
If utilities are able to engage in single-issue ratemaking on both their fuel and infrastructure costs, which make up the vast majority of their rate base, the duties of the Missouri Public Service Commission will become practically obsolete. These rate increases will become automatic with no discretion from the Commission and shift the burden of proof that currently rests with the utilities to show why they need a rate increase to the residential and business consumers that will be overcharged.
Many credit Missouri’s fair ratemaking process in holding down utility costs. Both consumer and business energy consumers warn that the new infrastructure surcharge could undermine Missouri’s economic advantage, crucial in today’s business climate and tight budget times being experienced by senior citizens, persons with disabilities, and low wage working families.
“Adding an expensive new surcharge to Missouri families and businesses electric bills is one of the worst things lawmakers could do in our current economy,” said Chris Roepe, FERAF Executive Director. “The impact on the pocketbooks of Missouri families and businesses cannot be ignored. The last thing Missourians need is for the legislature to allow another surcharge to be added to their electric bill.”
The state legislature already authorized a fuel surcharge added to many Missourians’ electric bills. This surcharge has already cost Missourians $478 Million since 2006, when utilities were permitted to assess it. This newly proposed surcharge would be even more costly to consumers because the utilities virtually restrict nothing in what may be included in the surcharge.