Patrick Ishmael

Yesterday Governor Eric Greitens announced that he is calling the Missouri legislature back into a special session that would address economic development issues in the state's Bootheel. Specifically, the legislature will likely take up a bill, or a variation of it, that died in the regular session's final days that would allow state regulators to negotiate lower electricity rates for at least two plants in southeast Missouri—a privilege not readily available to other Missouri companies and individuals. Supporters argue that because the plants would be heavy electricity users, a variance in state utility policy is warranted to make the sites more competitive, especially in light of the jobs that would come to those facilities. As the session closed, one representative in particular presented an electric, heartfelt soliloquy on behalf of his constituents who would benefit from the change. I have little doubt that this special session is being called at least in part because of that representative's fervent advocacy. 

But as happens with proposals like this, there is a tradeoff: other electricity users would ultimately pay more so that these plants could pay less. And it's that tradeoff that promises to be hotly debated next week when the bill comes up for reconsideration.  Here is the 64-dollar question: rather than carving out exceptions to rules as they go along, why don’t policymakers first consider whether the rules themselves need to be changed for everyone? Such a reanalysis seems exceedingly appropriate as the Legislature focuses its energy on Missouri's public utilities.  

As a general matter, utility customers across the state do not have a choice in who provides their power, and that impacts us all. If you could only subscribe to one cell phone company, the incentive for that company to compete for your business with better service and lower prices would be drastically reduced. The same is true of utility companies.  Why does Missouri allow the default electricity arrangement to be basically choiceless for the average Missouri customer? 

The state is part of a dwindling subset of utility regulators that still substantively curb utility choice in the United States. I would be more open to the notion that an energy customer is uniquely situated to require a break on its energy costs if Missouri was already operating in a market environment for utilities—one in which market forces could drive down the prices everyone pays. Whatever the eventual disposition of the smelter legislation in this special session, legislators need to have that serious reform discussion sooner, not later. And chances are good that discussion will begin in earnest next week.   

About the Author

Patrick Ishmael
Director of Government Accountability

Patrick Ishmael is the director of government accountability at the Show-Me Institute.