Update on SB 4! A Bad Bill Gets Worse!

SENATE SUBSTITUTE FOR SENATE BILL NO. 4

The Senate Substitute for Senate Bill No. 4 (SS for SB 4) is now a whopping 128 pages long, drastically changing how utilities in Missouri are regulated. Below is a summary of the bill’s key provisions that could negatively impact consumers and references to their respective sections.

Key Provisions Potentially Harmful to Consumers

1. Increased Utility Costs via Future Test Year Mechanism
   • Provision: Utilities (gas, water, or sewer corporations) can use a “future test year” to set rates based on projected costs and revenues for the first 12 months after new rates take effect (Section 393.150.3).
   • Consumer Impact: This could lead to inflated rates if projections are overly optimistic or inaccurate, as actual costs may differ from estimates.
   • Reference: Section 393.150, Subsections 3(1)–(5).
2. Reduced Oversight of Plant Closures and Replacement Power
   • Provision: Electrical corporations must certify replacement power before closing generating plants but can rely heavily on dispatchable power resources (Section 393.401).
   • Consumer Impact: This reduced oversight could lead to inadequate power availability.
   • Reference: Section 393.401, Subsections 2–4.
3. Economic Development Discounts Shift Costs to Other Consumers
   • Provision: Large gas customers can receive up to a 25% discount on new or expanded usage rates under economic development incentives (Section 393.1645).
   • Consumer Impact: The revenue shortfall from these discounts will be redistributed across all customer classes, increasing costs for residential and small business consumers.
   • Reference: Section 393.1645, Subsections 1–2.
4. Nonbypassable Securitized Utility Tariff Charges
   • Provision: Utilities can issue bonds to recover “extraordinary costs” (e.g., weather-related spikes in fuel prices), with repayment guaranteed through nonbypassable charges on customer bills (Section 393.1700).
   • Consumer Impact: This creates long-term financial obligations for consumers, even if they switch providers or reduce consumption.
   • Reference: Section 393.1700, Subsections 1–3.
5. Higher Penalties for Noncompliance with Renewable Energy Standards Passed to Customers
   • Provision: Utilities failing to meet renewable energy portfolio requirements face penalties that cannot be recovered from customers but may still result in higher compliance costs (Section 393.1030).
   • Consumer Impact: While penalties are not directly passed on, utilities may increase rates to cover compliance efforts or penalties indirectly.
   • Reference: Section 393.1030, Subsection 2(2).
6. Potential Rate Increases from Infrastructure Replacement Surcharges (WSIRA)
   • Provision: Water and sewer corporations can impose surcharges to recover costs of infrastructure projects without a full rate case review (Section 393.1506).
   • Consumer Impact: This allows utilities to raise rates more frequently and with less regulatory scrutiny, burdening consumers with higher bills.
   • Reference: Section 393.1506.
7. Limited Consumer Protections in Rate Cases
   • Provision: The burden of proof for rate increases lies with utilities but may be undermined by mechanisms like the future test year and WSIRA (Sections 393.150 & 393.1506).
   • Consumer Impact: Reduced transparency and oversight could lead to unjustified rate hikes without adequate consumer recourse.
   • Reference: Sections 393.150 and 393.1506.

Conclusion

While SS for SB 4 aims to modernize utility regulation and infrastructure investment, several provisions will lead to higher consumer costs and reduced oversight over utility practices. These issues warrant the Senate rejecting SS for SB 4.

Please Contact your Senator and ask them to reject SS for SB 4.

Find your Senator here!

Here is the full text of SS for SB 4: