JEFFERSON CITY • A top state energy regulator offered a scathing review Tuesday of a plan to change how electric rates are set in Missouri.
Missouri Public Service Commission Staff Director Natelle Dietrich called a proposal under consideration by state lawmakers a “radical departure” from the current rate-setting system and suggested it could result in a possible 62.1 percent hike for residential customers over the course of a decade. Large industrial customers such as Anheuser-Busch or Monsanto could see a 56 percent to 94 percent increase in their rates over 10 years, she said.
Her testimony before the House Energy and the Environment Committee came two weeks after a coalition of business officials also trashed Ameren Missouri’s plan to rewrite how its rates are set during a Senate hearing.
The company wants to make it easier to boost prices in exchange for a commitment to upgrade the electric grid.
The changes would put Missouri’s rate-making process more on par with Illinois, which approved a similar rate hike scheme in 2011.
It also would give its biggest customer, Noranda Aluminum, the ability to negotiate lower rates as a way to keep the troubled New Madrid-based smelter afloat. The 900-worker plant was idled on March 11.
Mike Griffin, a top manager at Noranda, told the committee that a failure to restart the smelter could hurt all Ameren customers by triggering higher electric rates to make up for its loss of volume.
“A smelter has to have a globally competitive power contract,” Griffin told the panel. “You have the ability to give us a chance, but the clock is ticking.”
Lawmakers said they were concerned about the potential closure of one of the biggest employers in southeast Missouri.
“I know that the loss of your company will be very devastating for that region,” said Rep. Margo McNeil, D-Florissant.
Regulators argued the plan would result in higher costs for users. Mark Oligschlaeger, director of the audit division at the public service commission, said rate increases would be less than they would be under current rules for the first two years of the plan, but would be higher in the next eight years.
A coalition of large electric users, including Nestlé-Purina, Doe Run, Ford, General Motors, Monsanto and Anheuser-Busch, also weighed in, saying the state should stick with its current system in order to best protect rate payers.
“While not perfect, this process has kept Missouri electric rates relatively low,” said Steve Spinner, representing the Missouri Industrial Energy Consumers. “Toss this bill on the scrap heap.”
In the Senate, where the issue was debated this month, Senate President Pro Tem Ron Richard also has expressed skepticism about the issue being resolved before the scheduled May 13 adjournment.
The legislation is House Bill 2816.