Op Ed
September 22, 2006

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MASW outraged by PSC decision — cost shifted from utilities to those least able to pay
by Bob Quinn

The Missouri Association for Social Welfare expresses its outrage at a Sept. 21 decision by the Public Service Commission, a decision that will result in higher electric bills for Missouri homeowners and renters. The impact will be most harmful to families that rely on low-wage jobs, or because of unemployment, disability, high medical bills or other reasons find themselves in economic distress. Such families and individuals already spend a greater portion of their income on electric and other utility bills than other households.

Who can best absorb an increase in the cost of coal or other fuel used to generate electricity? The profit-making electric utility monopolies of Missouri, with annual revenue in excess of three billion dollars? Or the household budget of the average Missouri family?

The state of Missouri has decided these costs should be paid by Missouri households, and not by the three billion dollar electric monopoly,

When the Public Service Commission adopted the Fuel Adjustment Clause rules on Sept. 21, in case EX-2006-0472, they fundamentally changed the way in which our state government balances the right of utility monopolies to have an opportunity to make a profit and the right of ratepayers (you and me) to reasonable rates.

Until the Sept. 21 decision if a utility saw an increase in its costs, it would come to the PSC, which would, through its staff, conduct a complete review and audit of all the utility’s expenses, cost-saving new technologies, and all other relevant financial information. With all factors considered, if an increase in rates was justified, it would be granted. But the historical fact is that, in most cases, while some costs to the utility had gone up, other costs had been reduced through efficiencies, technology and so on, and rates either stayed the same or were reduced.

Unfortunately, the rule adopted on Sept. 21 would not include a full review of all relevant financial information. The increased fuel cost would simply be passed straight through to us, rather than absorbed by a three billion dollar industry until such time, if any, as it can justify higher rates based on all relevant factors.

The Missouri Association for Social Welfare, which has advocated for social justice and the economically disadvantaged since 1901, filed comments regarding this rule during the public comment phase. In those comments MASW pointed out that the PSC would not require, in the new rule, any protections for low-income households.

It would be possible, as is done in some other states, to provide a low-income rate that is protected from the pass-through increases. It would also be possible to establish a basic-needs threshold, a number of kilowatt-hours per month needed to power the basic needs of a basic, no-frills household. The rate for that number of kilowatt-hours could be protected from any increases. If the Commission felt compelled to adopt a Fuel Adjustment Clause rule, it could have at least included these kinds of protections. But it affords no protections.

MASW also noted in its comments that this new rule would create an increased workload for the staff of the PSC, with the additional filings to be processed and monitoring for compliance. However, the number of staff positions at the PSC has been cut significantly over the last couple of years. The funds for staff training and the hiring of outside experts have also been cut.

So a three billion dollar industry wants to pass more of its costs directly to our household budgets more quickly, and the public agency that is supposed to keep an eye on that industry for us has fewer people and resources to do its job. That’s why we need people to get involved on this issue.

Bob Quinn is the executive director of The Missouri Association for Social Welfare. From September 2001 through January 2005, Quinn was executive director of the Missouri Public Service Commission. The Missouri Association for Social Welfare website is at www.masw.org.


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