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November 9, 2011
Missouri Senator Scott Rupp Speaks to RCGA
Public Policy Council
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Missouri Senator Scott Rupp
(R-Wentzville)
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On November
4th, Missouri Senator Scott Rupp (R-Wentzville) spoke
to the RCGA's Public Policy Council about the state's
fiscal situation, economic development opportunities, and the
recently completed Special Session. Sen. Rupp, who is
Vice-Chair of the Appropriations Committee, noted that Missouri
is the "fifth most financially sound state in the country," and
one of only six states that has maintained its AAA bond
rating. Despite being in good shape compared to
other states, Sen. Rupp explained that Missouri is still facing
serious financial issues, including a budget hole of $750 million
in the coming year due to lower revenues and the federal
stimulus funds being exhausted. He said that the
legislature will be forced to make tough choices, as "We have
already trimmed the fat and started to cut into the muscle, and
next year we will be cutting into the bone" of important state
programs. He said the economic future of the state
depends on Missouri's unemployment rate going down, as
the majority of the state's revenue comes from income and sales
taxes, and those who are unemployed aren't paying income taxes
and are buying fewer goods.
Sen. Rupp also commented on the recently
completed Special Session, calling it a "debacle" and an
"embarrassment." He predicted that no progress
will be made on new economic development legislation until issues
regarding the size and duration of existing state tax credit
programs are addressed. He also commented that the
State should focus on what it's good at and take advantage of its
strengths in growing industries like life sciences and financial
services. Sen. Rupp noted that Missouri is already
the second leading state in financial services, and that it
should strive to become first.
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Eric Schneider, MSD Rate Commission
member and Director of Energy and the
Environment for the St. Louis
RCGA
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Eric Schneider, Senior
Director for Energy and the Environment at the RCGA, also spoke
to the Council about the Metropolitan St. Louis Sewer District
(MSD) wastewater rate proposal. Eric, who is a member of MSD's Rate
Commission, explained that at 525 square miles, MSD's sewer
system covers all of St. Louis City and 80% of St. Louis County,
serving approximately 1.4 million residents for stormwater and
wastewater needs. It is one of the largest and most complex
sewer systems in the country, and some sections are 150 years
old. Eric explained that the proposed wastewater rate
change is driven by a number of factors, including new regulatory
requirements, an increase in the use of debt financing, a
declining customer base and water usage, and economic conditions
that prevent many customers from paying their bills.
MSD recently
entered into a $4.7 billion
Consent Decree with the U.S. Environmental Protection
Agency to address
sanitary sewer system overflows over a 23-year
timeframe. The
MSD rate proposal includes spending more than $1 billion over
four years to support capital investments necessary to comply
with the new government regulations. Eric
explained that voters will have two choices to pay for the
improvements -- approve $945 million in additional bonds, which
would result in wastewater rate increases of about 13% each year
for the next four years, or pay for the necessary improvements
without bonding, which would result in an increase of 155% for
the next four years. He also mentioned that the RCGA and the
Missouri Industrial
Energy Consumers (MIEC) support a consumer oversight
committee to
protect ratepayers from cost overruns during the
improvement project. Eric said that the MSD Board is expected to
introduce their rate plan in December, with a tentative bond
authorization election this winter or spring, triggering new
wastewater rates in July 2012. To view the
presentation on MSD's rate proposal, click on the graphic
below.
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Focus on Illinois: Veto Session
Update
On October 26th the
Illinois General Assembly overrode the Governor's veto of the
"smart grid" bill, allowing Ameren Illinois and Commonwealth
Edison to modernize their electric utility networks.
The new technology will help the
utilities pinpoint outages and make repairs more quickly,
identify weaknesses before they cause major problems, and allow
customers to see how much power they are using in real
time. The utilities will invest a combined $3.2 billion in
infrastructure improvements to reduce and shorten outages and
save consumers money. Over the next decade, Ameren
expects to invest $625 million, but estimates that the new law
will only increase the average residential utility bill by about
$3.40 per year. Ameren also notes that the
expected savings from the smart grid energy technology will more
than offset the rate increase.
Other legislative issues that are still being
discussed during Veto Session include pension reform, an expansion of gaming,
funding for regional school superintendents, and tax incentives
to help some businesses and low-income workers.
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RCGA Energy and Environment Council Discusses
Missouri Energy Issues
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Missouri PSC Chair Kevin Gunn
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The RCGA Energy and Environmental Council met on
November 8th to learn about energy issues facing
Missouri businesses and consumers. Kevin Gunn,
Chairman of the Missouri Public Service Commission (PSC), gave
the Council a comprehensive overview of the PSC’s
responsibilities in ratemaking, rulemaking, and
investigations. Chairman Gunn highlighted how
Missouri’s low energy prices have traditionally represented
a competitive advantage for the state, but upcoming U.S. EPA
regulations may require costly improvements to many of
Missouri’s power plants. However, he also emphasized
that making prudent investments in efficiency and pollution
control now can reduce capital investment and compliance costs
down the road. Upcoming issues for the PSC in 2012
will include a new renewable energy standard, energy efficiency
requirements, funding for the Office of Public Counsel, and an
early site permit for the Callaway nuclear plant. To
view Chairman Gunn's presentation click on the graphic below,
left.
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Josh Campbell, Executive Director of the
Missouri Energy
Initiative
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Josh Campbell,
Executive Director of the Missouri Energy Initiative (MEI),
described how his organization seeks to raise the energy literacy
of Missourians by
informing policy makers and the general public on energy
opportunities, research, and development in the
state. One of MEI’s primary
objectives is to bring various stakeholders together to engage in
civil discourse about Missouri’s energy challenges.
Campbell emphasized that there is no silver bullet to solve all
of our energy problems, so stakeholders need to work together to
develop the most beneficial energy portfolio for Missouri.
The MEI is holding the Midwest Energy Policy Conference
in St. Louis from November 30th to December
2nd with several presentations on energy
policy and market issues facing the Midwest. To
register for the conference click
here. To view the presentation
click on the graphic above, right.
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Steve Kidwell, VP of Corporate
Development for
Ameren
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Steve Kidwell,
Vice President of Corporate Development for Ameren, noted that
Missouri is in the lower quartile among U.S. states for energy
costs, at less than a dime per kilowatt-hour, but in the top
quartile for service reliability. He also drew
attention to Ameren’s aging power plant infrastructure and
the company’s need to invest heavily in new capacity over
the next two decades. Additionally, Ameren recently made
investments to comply with regulations mandated under the Clean
Air Act that increased costs to existing plants. Kidwell
estimated that demand for energy in Missouri will increase 15-20%
over the next two decades and the real challenge will be deciding
the most beneficial generation sources in which to invest as old
plants are decommissioned. To view the
presentation click on the graphic below,
left.
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Jim Hearing, Director of Marketing for
Laclede Gas
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Jim Hearing, Director
of Marketing for Laclede Gas, discussed the growing importance of
natural gas in our energy mix. He noted that natural gas is a more
efficient and cleaner way to generate electricity than coal, and
it is used in almost all facets of U.S. energy consumption,
including transportation. For instance, the St. Louis
Lambert Airport is using natural gas for their shuttle vans and
has saved $700,000 in one year from the switch. Further,
with the newly discovered shale gas reserves in the United
States, there is an estimated 100-year U.S. natural gas
supply, creating greater price stability and reducing fuel
costs. On the demand side, Laclede is working with
area customers on energy efficiency education and has been active
in a green home building program with the St. Louis Area Home
Builders Association. To view the presentation
click on the graphic above, right.
The
RCGA Energy and Environment Council is open to RCGA
members. If you
are interested in participating, please contact Eric
Schneider at eschneider@stlrcga.org.
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