*Editor’s Note: This opinion is in response to an article titled “Bill introduced to strengthen electric infrastructure” published in the Wednesday, May 1 Lake Sun.
Since the byline says “Special to Lake Sun” I assume the story was furnished by the MEA or Ameren Missouri. I assume this because the article is long on platitudes and a lot of catch phrases in support of ISRS Legislation and very short on any real information on what the legislation is actually about. Other than a general references that it will “allow utilities to recover costs of infrastructure investments in a more timely manner” and “closing the electricity investment gap” it doesn’t explain how this happens.
With a little research, the real story behind the ISRS legislation becomes clear.
Rather than borrow or spend their own money to invest in infrastructure improvements, the utilities will be able to pick the pockets of consumers in order to pay for them. It is estimated that customers will be paying an additional $14 million on their utility bills for every $100 million the utility spends on improvements.
The ISRS legislation also includes a “cost overrun tracker” which allows the utilities to pass on any unexpected costs directly to the consumer. Rather than making the utility operate more efficiently by trying to keep their spending in check, they can just add the cost of their mistakes to your utility bill.
If the ISRS legislation had been in effect over the last few years, in addition to the $ 5.7 billion in rate increases approved by Public Service Commission (PSC), Missouri consumers would have also paid an additional $200 million in overrun costs.
Instead of “preserving strong Missouri Public Service Commission oversight”, the legislation actually comes with less strings attached. It would also allow Ameren to add a surcharge to customer’s bills without going through the currently required PSC ratemaking process that includes prudence, as well as revenue versus cost reviews.
And unlike the spending cap for gas and water utilities of $125 million over three years, the cap for electric utilities will be $3.4 billion over three years. And these are all up-front costs, Ameren will get the money now, at zero interest, from you, for something they plan to build later.
What wasn’t mentioned in the article is that Ameren claims that the up to 10 percent rate increase, yes 10 percent, that the legislation allows for, is needed because Ameren’s bond rating is so poor it can’t borrow money cheaply.
Ameren Missouri’s bond rating is actually A3, which for a bond rating, is considered a strong investment grade. The real reason Ameren can’t borrow money cheaply is that due to bad management practices at its two other units, Ameren Illinois and Ameren Generating, they have experienced huge losses in the open market.
Page 2 of 2 - So, because of their poor management decisions, they now want the Missouri legislature to come to their rescue by allowing them to pass the cost of their mistakes to Missouri consumers.
America’s electrical grid system is truly outdated. The joke is that if Alexander Graham Bell woke up today he would not have a clue as to what a smart phone was, but if Thomas Edison woke up today, not only would he recognize the grid, he’d probably be able to repair it!
It’s true that Missouri’s electrical grid needs to be updated and modernized, but giving Ameren a blank check with little or no oversight is not the way to do it.