Monday, February 13, 2017
Ed Emery: SB 190 does not create automatic electric bill increases; it just lets them charge you more
It's final – Missouri will be the 28th Right to Work state. Governor Eric Greitens signed Senate Bill 19 on Monday, and it will become law on Aug. 28th, 2017. Most of this week was spent debating the pros and cons of “Project Labor Agreements,” (PLAs). Senate Bill 182, prohibiting PLAs for public projects in Missouri, was perfected Wednesday at about 8 p.m. Once enacted, SB 182 could save the state and local governments millions when it is necessary to build schools, roads, or public libraries. Progress was made on important appointments as well. The governor’s appointments to the Departments of Natural Resources, Corrections, Agriculture, and Public Safety plus the commissioner of the Office of Administration were confirmed by the Senate.
One of my bills that has begun receiving significant media attention is Senate Bill 190. It resulted from exhaustive study, consultation, and exhaustive research both during the summer and since the 2017 legislative session began. You may have already received a robo-call asking you to voice disapproval. I haven’t received the call so cannot speak to its content, but as my office receives calls from constituents, we are finding that many are voicing support once the bill is explained.
The Senate Committee Substitute for Senate Bill 190 was voted out of the Commerce Committee on Wednesday 9 to 1 and should be on the perfection calendar soon. Because of the hysteria being circulated by those opposed to the bill, I am offering some explanation below. Much of the opposition is due to either a misunderstanding about how electricity rates are set by the Public Service Commission or a lack of full disclosure of information about the public utilities themselves.
First of all, contrary to the opinions you may have heard, Senate Bill 190 does not create “automatic increases” in your electric bill. It does create a small surcharge that could add up to 1.2 percent per year to your cost of electricity or about one tenth of one percent per month. It also allows an investment accounting procedure called PISA or plant-in-service-accounting, which should have the effect of freeing up more capitol for grid upgrades. It removes none of the Public Service Commission oversight.
The current regulatory model was created in 1913. No one can deny that electricity production, delivery, and uses have evolved significantly since 1913. That may be why 46 states have reformed and updated regulations to allow for electric grid and infrastructure investment. Missouri is one of only four states that have not taken these very prudent steps. Of the four states that have not reformed regulation, three (Missouri, West Virginia, and Idaho) have seen the most significant cost increases in the last decade. In direct contrast, Florida utilities invested around $2 billion since 2006 in grid modernization and smart meters. Costs for customers in Florida have gone down 2.8 percent. Granted, Florida is more dependent on natural gas than Missouri, and natural gas prices have declined, but testimony from a former Florida regulator attributed credit to regulatory reform as well.
What this means is that states with the modern grid and infrastructure technology environment that Senate Bill 190 creates, have found that the modernization efforts result in more efficient electricity delivery to their homes and businesses with savings being realized by those home and business owners.
Additionally, many of us have experienced electrical outages in our homes and businesses, which have often taken hours before electricity has been restored. Modernization of the regulatory environment provided by Senate Bill 190 incentivizes the utility to invest in a more robust manner. For example, modern components of the grid that will allow electronic switching of electrical delivery remotely rather than sending a crew to manually switch to an alternative delivery method will save minutes, hours, and may save lives in an emergency situation.
Finally, in our modern technology age, cybersecurity must be on the table with our conversation on the modernization of our electric grid. While creating our modern grid, we have to ensure the new grid has resiliency, reliability, and can be protected against physical and cyber intrusions. And that’s really what Senate Bill 190 is about. It is designed to help focus utility investment on modernization of the electric grid. The legislation is also intended to lead to more stable and predictable electricity rates over time.
Electricity generation and use has changed since 1913. The current regulatory environment worked reasonably well in an age of large generation plants delivering electricity to rapidly growing demands. However, in the age of distributed generation (solar panels & windmills) and devices that are ever-more dependent on stable, uninterrupted electricity, Senate Bill 190 is critical to the future of all Missourians.