Ed responds to hit piece from special interest group | Ed Emery for State Senate 31

Ed responds to hit piece from special interest group

Posted by on July 18, 2012 in Press, Recent, Uncategorized | 2 comments

Ed responds to hit piece from special interest group

To my valued volunteers, supporters, donors, and friends:

On July 16, 2012, mailers from Missourians Against Higher Utility Rates began to hit mailboxes of voters in Missouri’s 31st state Senate district. The ads attacked my voting record while serving in the Missouri House. Considering the great deal of time and treasure you have invested in my campaign, I believe you deserve a firsthand explanation from me.

Although the hit piece officially was from Missourians Against Higher Utility Rates, it should be noted that the only donor of record to that organization is Noranda Aluminum of New Madrid, Mo. That’s significant because Noranda is the largest electricity consumer in the state and actively lobbies state government in Jefferson City. Today, because of their efforts, Noranda enjoys the lowest electric rates of any customer in the state. In essence, Noranda pays half of what you pay! (Residential rates are 8.96 cents per kilowatt hour compared to 3.77 cents for Noranda.) Additionally, over the last five years, residential base rates have increased 26 percent while Noranda’s lobbying efforts have held down their rate increases to only 6 percent.

So why the negative mailer? During the time I served as chairman of the House Utilities Committee, Noranda approached their electric provider, St. Louis-based Ameren Corporation, with a request to discount their rates even further. When Ameren refused, Noranda came to me, as Utility Committee chairman, and asked that I intervene. They wanted legislation that would give them special treatment and mandate that Ameren provide lower rates — just for themselves, not for everyone across the board.

Naturally, I refused their request. Not only would such a “special law” for one company violate Article III, § 40 of the Missouri Constitution, it also would have been unfair to the state’s other consumers, who likely would have to bear the burden of additional energy costs. It also would have injected even more government control and price manipulation into the energy industry. That brings me specifically to the bills mentioned in the hit piece, two of which I sponsored, and a third one that I voted for, along with all but two of my colleagues in the House.

Contrary to the report in the mailer, there was no provision in any of these bills that empowered utility companies to arbitrarily raise their rates. They merely gave utilities the authority to request a rate increase from the Public Service Commission (PSC), which has the exclusive power to raise rates, to recover costs related to expansions required by environmental complianceThe electric industry is a carefully controlled, government-protected monopoly. It is an example of a central-planning bureaucracy trying to coexist with a generally competitive world. The Public Service Commission, rather than market forces, governs profits and losses. Yet, even in a government-protected monopoly, the forces of supply and demand prevail, especially when transmission crosses state lines.

As a net exporter of electricity, Missouri’s rates generally are lower than many other states. In fact, Missouri’s rates rank about seventh in the country according to the U.S. Energy Information Administration. Electricity exports usually help keep Missouri’s rates down because of the sharing of fixed costs, and sometimes from the return of export profits that offset Missourians’ costs. However, with rapidly growing demand, Missouri will not be an exporter much longer. Moreover, with government restrictions on the cheapest sources of electricity — as well as the long delay in new construction permitting and the lengthy construction process — financing costs can make building new power plants, particularly nuclear plants, cost prohibitive.

All electric providers in Missouri face the same challenges — an aging infrastructure and ever-more stringent EPA regulations aimed at forcing older coal-fired plants off line. The two bills mentioned in the mail piece that I introduced were designed to significantly reduce the cost of financing new construction. The first step of the process, a site permit, would have cost customers less than $2 per year! And, the legislation would have saved customers billions in financing costs. Those savings would have flowed directly to consumers in the form of lower rates via the PSC regulatory process.

The current regulatory process virtually assures that no new nuclear power plants will be constructed in Missouri, yet the existing nuclear power plants are largely responsible for Missouri’s relatively low electricity rates. If Missouri is to remain an energy leader in the future with lower energy costs, we must stop special treatment of a favored few and implement regulatory changes that will allow the development of an energy infrastructure to facilitate more jobs in our state.

In conclusion, please feel free to ask me about any of my past or present policy positions. As always, I am humbled and grateful for your support!

More details on the specific bills and parties involved can be found here:  http://www.edemery.com/fact-check/

 

2 Comments

  1. I am all for not allowing special accommodations for large corporations, but why does Ameren get such special treatment? Why can’t we , the regular people in Missouri get a choice in who provides our electricity? Ameren is a Monopoly due to special treatment by Missouri politicians. If we had real choice of power providers, maybe we , the home owners, workers, or as some call us ” the little people” could enjoy lower electrical prices like Noranda does right now. The same should happen for Gas as well. Laclede gas is another monopoly that the state of Missouri protects. Its time to stop the state backed monopolies. all of them.

    • Exactly. In a free market system like ours, the only monopolies are those protected by government. Our society has concluded mistakenly that it is government’s job to “manage” supply and demand in utilities. It is the public’s mind that you must change. The theme I followed as chairman of the House Utilities Committee was to try to engage market forces as much as possible within the regulatory model imposed by existing statute. When we identified ways to change statutes to further apply market forces, I tried to do that. One reason for the reluctance of consumers to move from the central-planning model to the consumer-driven one is that there are examples of states who took those steps and suffered major price increases (Illinois for example). Imposition of the “regulated monopoly” for so long makes the transition back a rough one. The public would have to understand the elements and value of the transition and be willing to suffer the temporary impacts or they would panic and revert back to the monopoly with renewed allegiance to it. That is my humble opinion.

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