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#1 Priority for Missouri: Restructure the Electric Industry

Image of what a PSC hearing Deregulate Electric Industry would look like

For ten years now I have devoted myself to bringing clean energy to Missouri (see "Veteran Leads a Solar Energy Revolution", SMS SunBeams, January 2007). Over the course of the past decade I have received an education in abstruse energy regulation and policy that ranks with the US tax code in its difficulty to understand. No wonder this issue is not well understood by the general population. Episode One, Season Two, "A Race Against Time" of National Geographic's documentary series "Years of Living Dangerously" accurately portrays the arcane world of energy regulation when "Saturday Night Live" cast member Cecily Strong travels to Nevada and Florida to investigate what is blocking the growth of solar energy in the United States. The answer is clear - our own state government influenced by special interests is the one and only obstacle to the transition from fossil fuels to 100% wind, solar and water power.

So how did we find ourselves in this predicament? Democratic representation in Missouri is at an all time low. Our representatives are term limited. By the time they get to Jefferson City it is time to run for re-election. By the time they learn the ropes their term is up and they are out of office. The era of statesmanship no longer exists. Instead, with no limits on campaign donations and no separation between our legislators and lobbyists, special interests have undue influence over our state government. In other words, their is no significant impetus, motivation, funding or support to change the status quo and it is political suicide for a Missouri legislator or governor to act other than at the bidding of the special interests that placed them in office and provide employment for them as lobbyists after they leave office.

So what is the status quo? Well it first entered the Missouri Statutes around 100 years ago when electricity was new. To encourage private investors willing to risk the large sums of money needed to build the infrastructure, the state agreed in exchange to allow those same utility companies to operate free from competition and with a guarantee recovery of their investment plus interest. As a result there is no open competition, no free residential or commercial electricity market in Missouri. Instead we have regulated monopolies generating, transmitting and distributing electricity in Missouri. At the federal level, interstate electricity sales are regulated. Within the state the Federal government plays no role. Instead the electricity market in Missouri is based on statutes, rules and a five person commission appointed by the governor.

Map of Deregulation by State

Pictograph of service breakdown Before/After Deregulation

Alternative models each with their own nuances exist across the United States. The issue has come up before in Missouri. In fact, natural gas is deregulated in Missouri. For an example of a state with a deregulated electricity market Missouri need look no further than its neighbor to the east - Illinois. After deregulation took effect in Illinois, Ameren sold off its power plants and now is a delivery of service provider only maintaining transmission lines, meters and poles. Ameren CEO, Warner Baxter noted in a recent BizJournal article that since deregulation, Ameren Illinois has delivered an average 12% return to investors compared to only 9% in Missouri where the company is constrained by government regulation. As recently as last year, Mike Grimes of University City filed a ballot access petition to put the issue of deregulating the electricity market in Missouri to a vote. Collectively referred to as deregulation all such strategies attempt to separate the business of producing electricity from the business of delivering the electricity from the source to the consumer. Restructuring and deregulation leads to lower prices and cost efficiency and the creation of a fair marketplace through the addition of competition and the elimination of cronyism.

A recent Brookings Institution report (See "Brookings Report: GDP Up, Carbon Emissions Down", Show Me Solar, SunBeams posted December 14, 2016) added the latest data point to Missouri's record of failure in switching off coal - a ranking of dead last in the United States (#50 out of 50). Now more than ever with the cost of damages incurred from the effects of man-made climate change mounting every day, Missouri must act and act quickly to eliminate fossil fuel emissions 100%. Coal does not benefit Missouri. Instead it is a net loss as Missouri imports over a $1 billion in coal each year. There are no Missouri coal miners whose jobs would be lost. Now that a clear alternative exists in abundance in solar and wind, Missouri needs to deregulate the electricity market and reap the benefits of a state economy free from fossil fuels.

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