LETTER: New law won't increase electricity bills

Thursday, July 9, 2009 | 2:25 p.m. CDT; updated 11:43 a.m. CDT, Wednesday, July 15, 2009

This letter responds to the recent AP story about Missouri’s new law on energy efficiency for electric utility customers (Senate Bill 376). While the article was fairly accurate in describing the benefits of the new law, the headline and lead-in sentence of the article are a bit misleading. There will be no fee for using less energy.

Electricity usage is generally growing in Missouri and across the country. Utilities have two options in response: they can build more power plants, or they can curb the growth by encouraging energy efficiency. Utilities must do something because they are required to supply all the electricity their customers demand. It is almost always cheaper in the long run for the utility to cut growth, even if it means paying customers rebates to decrease usage. Building power plants meant more profit for the utility than curbing growth, so utilities always chose to build power plants, even if curbing growth would have resulted in lower rates for customers. SB376 allows the Public Service Commission to set rates including the costs of curbing growth (such as rebates), but only when those costs are less than the alternatives. Because of the new law, utilities will no longer have such strong incentives to favor power plants over energy efficiency. Bottom line: Customer bills will be lower than they would be without the new law.

Lewis Mills works for the Office of Public Counsel.

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