JEFFERSON CITY, Mo. (March 14, 2016) – Two witnesses are prepared to give Missouri senators details about how drastic changes to electric utility law in Illinois that are similar to those being proposed in Missouri have negatively affected consumers. The witnesses will appear Tuesday, March 15, at a hearing on Senate Bill 1028.
The witnesses will testify on behalf of Consumers Council of Missouri. John Coffman is utility consumer counsel for the group and a former head of the state utility consumer advocacy office. Michael Brosch is president of Utilitech, a firm based in Kansas City that focuses exclusively on utility regulation. Both witnesses have extensive experience in the regulation of utility rates in Missouri and Illinois.
“This bill, which calls for formula rates, would seriously harm hundreds of thousands of customers, from the smallest to the largest,” said Joan Bray, executive director of Consumers Council of Missouri, which advocates for residential customers. “It would allow Ameren Missouri, KCP&L and Empire Electric higher rate increases than those granted in recent years, and it would dramatically limit the Public Service Commission’s oversight of the rate-making process.
“Ameren is presenting this as merely updating a regulatory system it labels as antiquated, even though utility laws have in fact been amended many times over the years, “ Bray continued. “The real issue is that Ameren doesn’t like the current process, which gives consumers a fighting chance to curb rising rates. This bill would push consumers further out of the process.
“Here in St. Louis we have been able to look across the Mississippi River and see the injury similar legislation has inflicted on consumers in Illinois since it was adopted in 2011. We believe our testimony can serve Missouri consumers and legislators best by exposing the economic impacts in Illinois,” she said.
Brosch, a former employee of the Missouri PSC, worked for the Illinois Attorney General to respond to the formula rate legislation proposed there. He then represented the AG in the initial formula rate case and each of the subsequent annual rate cases of Commonwealth Edison and Ameren Illinois. He will describe to the committee how formula rates have played out in Illinois. They have dramatically raised utility rates for customers and utility profits for the companies in that state, while producing little tangible public interest benefits for ratepayers.
Coffman has been Consumers Council’s counsel for nine years. Before that he served as director of the Missouri Office of Public Counsel, working a total of 17 years for the office. He has also participated in the Illinois debate over the formula rate legislation and in subsequent rate cases.
“There should be no question that the Illinois mode of electric utility formula ratemaking has caused economic damage to consumers in that state, raising prices for ordinary consumers far higher than would otherwise been allowed under the current method of setting utility rates,” Coffman said. “Missouri chose not to follow Illinois over the cliff when electric restructuring was in vogue in the 1990s, and Missouri should also not follow Illinois’ bad example when it comes to formula rates.
“Missouri currently has electric utilities that are financially healthy and electricity reliability indicators that exceed those in Illinois. Electricity rates are also comparatively lower in Missouri. But those rates would rise much higher than necessary if the formula rate scheme contained in Senate Bill 1028 becomes law,” he said.
SB 1028 is sponsored by Sen. Ryan Silvey (R-Kansas City), chair of the Senate Committee on Commerce, Consumer Protection Energy and the Environment. The hearing before his committee will be at 3 p.m. Tuesday in the Senate Lounge.