Large companies and businesses could benefit from Emery’s SB 190

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JEFFERSON CITY, Mo. – In past sessions, there has been a stalemate between some business and utility interests over grid modernization legislation. However, intense negotiations this session have brought many business groups on board supporting Senator Emery’s SB 190 that would see Missouri’s utility grid brought up standards seen in the rest of the country.

Sen. Ed Emery’s SB 190 seeks to establish the “Missouri Economic Development and Infrastructure Act” by updating the state’s regulatory model, which most experts call “outdated” and “decrepit.” While others refer to the decades of neglect as dangerous. Missouri’s current model was created in 1913.

Out of 50 U.S. states, only four, Missouri included, have not reformed or updated their regulations to allow for electric grid and infrastructure development. Leaving some parts of the state susceptible to natural disasters such as earth quakes extremely vulnerable.

While proponents of the bill tout the economic benefits that a modernized grid could bring customers, a number of businesses working in the Show-Me State also stand to receive some gains.

The issue of building the economy and growing the workforce has been a central piece of this year’s legislative session, with seemingly every bill trying to improve Missouri’s current state. SB 190 is another bill that could take steps toward addressing those concerns.

Energy sources are always in demand, and supporters of the bill say it will allow customers more control over their energy usage, allowing for savings for customers on their bills. Ameren has proposed a $1 billion investment for grid modernization over the five-year period of 2018 to 2022.

Ameren estimates that each $1 investment would equal $2.40 of benefits and savings for customers.

Modernizing the grid could also cut down the time power outages might last, allowing utilities to better identify issues and address the problem remotely, instead of waiting for a crew to arrive.

The work needed to upgrade the aging substations, as well as monitors for the new grid, meaning more jobs. Ameren has estimated an additional 3,000 jobs could be created.

But the title of the act references economic development, and some provisions that lobbyists are pushing for could increase the incentives for companies to operate in Missouri.

Doe Run, a lead-producing company in southeast Missouri, could also potentially benefit from the bill, allowing it to grow and expand. The company supports Emery’s bill, as it could potentially address the issue of rising utility costs.

“Our electric rates have increased 40 percent since 2008, and that’s not sustainable. Our energy costs are about 20 percent of our operating costs, and have a very significant impact to our bottom line,” Chris Neaville, Doe Run’s asset development director, said. “There’s a feature in SB 190 that’s specifically designed to keep Doe Run on the grid. That would decrease our rates back to where they were five years ago, and they would be held there for 10 years.”

Neaville says he think part of the motivation for this legislation is the experience of when Noranda went off the grid, and the effects it had on customers.

But some groups have opposed the bill, based on this outcome.

“The first thing SB190 does is it allows the utilities to tack on transmission line costs in their fuel adjustment clause,” the Consumer Council of Missouri said in a statement in January of this year. “This would add fixed fees and volatility to a customer’s monthly bill. But perhaps most egregiously, SB190 carves out a large discount for one of our state’s largest utility consumers: Doe Run. With this, residential consumers are being asked to shoulder a larger share of any rate increase to subsidize Doe Run, the largest integrated lead producer in North America and the largest primary lead producer in the western world.”

SB 190 also could provide some incentives to large companies, extending economic development riders (EDR) related to energy under the bill. The legislation includes an EDR, creating a 20 percent discount for industrial consumers for new loads and expanding. EDRs encourage industrial and commercial development in an area by providing discounts and savings over a certain period of time.

A good example of how this works is to look at Ford, who currently is the beneficiary of one such EDR from Kansas City Power & Light for their operation at the Claycomo Plant. KCP&L’s offer is for five-year EDR’s, starting at 30 percent in the first year and decreasing five percent each following year.

“We’ve been seeing a decline in industrial consumers,” Neaville said. He says that as large companies go off the grid, it forces the costs on other customers. But if the companies expand, they pick up more of the load, easing the costs off of the other customers.

SB 190 currently sits on the formal calendar, waiting for perfection and a third reading from the Senate, and could be brought on the floor when the legislators return from spring break.

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