Senate proposal would open Missouri’s energy market up to competition

Much of that conversation has been about Republican-sponsored legislation already sent to the governor’s desk, which consumer groups have warned could dramatically raise costs.

But rather than work with utility companies to provide reliable service at reasonable rates, Sen. Nick Schroer, R-Defiance, wants to break their monopolies.

His bill, aimed at deregulating Missouri’s energy market so that free enterprise prevails, was heard by a Senate panel on Tuesday.

A deregulated energy market allows any company to create power generation so consumers can shop for their utility needs among many providers. Under Missouri’s current system the utility companies have a monopoly and operate in conjunction with government regulators.

A monopoly system ensures companies can’t raise rates at the drop of a dime, as the Public Service Commission needs to approve all rate increases. The PSC also works with companies to ensure the state has enough power generation.

In a competitive market, Missouri’s existing utility companies would still have a monopoly over the power lines connecting generation to people’s homes but they would have to sell off all of their power plants. For example, Ameren has power generation and transmission in Missouri, but in Illinois, which is deregulated, they only have transmission.

“This bill is a monumental shift in how we’ve done business as usual in the state of Missouri, moving toward the free market to tackle energy costs, consumption and production,” Schroer said.

Missouri’s utility companies aren’t so thrilled about the idea.

“The local ties in communities, the hundreds of back-office jobs and local control all fade away (when we’re forced to divest),” Jason Klindt, senior director of external affairs at Evergy, said. He added that in deregulated markets, there’s far more fraud as predatory companies can confuse people into signing up for bad energy plans.

John Coffman, legal counsel for the Consumers Council, which represents Missourian’s interests on utility issues, said he had “mixed feelings” about the proposal.

“If you’re going to go down this path, you have to put a lot of effort into making sure that the rules are clear and consistent,” Coffman said, echoing a similar concern as Klindt. “Residential customers can get scammed, particularly those in vulnerable communities.”

Under the legislation, the state is required to create an education campaign to teach Missourians about the new system and how to avoid fraud before the competitive market opens up.

On a more positive note, Coffman added that, “There are certainly benefits to having the entity that is building their power plants have the risk completely on themselves.”

Representatives of large energy consumers including Ford and General Motors spoke in favor of deregulation, arguing it would lower costs.

“(The legislation would) shift the risk from the ratepayers to the investor and create options for customers, reducing the costs and allowing you to transition and update your aging infrastructure reliably and affordably,” said Abby Foster, vice president of policy and advocacy at the Retail Energy Advancement League.

It’s unclear whether states with deregulated markets are really cheaper than Missouri. According to the U.S. Energy Information Administration, energy costs have grown about the same amount in regulated Missouri and Pennsylvania, which is deregulated, over the last 20 years. Pennsylvania does have newer, higher-producing generation than Missouri.

What’s unequivocal is the greater number of options provided in other states. Pennsylvania has a user-friendly website where consumers can look through a host of providers to decide which company is right for them. Different providers offer fixed rate plans or plans with more renewable energy.

About half of states have some form of deregulated market.

The Senate committee didn’t vote on Schroer’s legislation.

The legislation is Senate Bill 487.