SB 1396: relating to discounts by electrical corporations.
Sponsor: Mike Henderson
Strongly Oppose
Hidden ratepayer cross-subsidy
SB 1396 rewrites Missouri's utility discount law (§393.1640) that lets electric utilities give big-load customers discounted base rates as part of "economic development" deals. It sets a 35% discount for mid-size new load (300 kW-10 MW) for 5 years, and changes the large-load discount (>10 MW-75 MW) into a flat 25% for 5 years instead of the prior variable-cost-based structure. It also keeps and operationalizes a mechanism that effectively spreads the revenue shortfall from these discounts across all customer classes through a "uniform percentage adjustment" in rate cases. In practice, large favored loads win, and ordinary families and small businesses risk paying more over time through cross-subsidies hidden inside rate design.
What Does This Bill Do?
- Mid-Size & Large Load Discounts: Sets a 35% discount for mid-size new load (300 kW-10 MW) and a flat 25% discount for large loads (>10 MW-75 MW) for 5 years.
- Cross-Class Cost Allocation: The revenue requirement is set using discounted revenues, and the "impact of the discounts" is allocated to all customer classes via a uniform percentage adjustment.
- Deletion of Guardrails: Removes detailed statutory language describing how variable cost is determined and removes a provision that contemplated PSC action if discounted rates fail to cover variable cost.
Constitutional or Critical Context
Even if pitched as "jobs and growth," the structure is a ratepayer-backed incentive program administered through utility tariffs and PSC proceedings. The bill requires the customer to receive a government "economic development incentive," embedding government incentive stacking. The rate structures that shift costs onto non-participating customers can function like an indirect wealth transfer via monopoly pricing, raising fairness and transparency concerns.
Red Flags & Recommended Amendments
Ratepayer cross-subsidy baked into statute
Makes families and small businesses the backstop for "economic development" discounts via §393.1640.2's uniform percentage adjustment across all classes.
Guardrails deleted while discounts remain
Deletes variable-cost determination language and PSC corrective language, leading to less transparency and more risk that discounted rates fall below cost.
Act for Missouri Recommendation:
Act for Missouri OPPOSES SB 1396. While excluding data-center-style facilities is a good guardrail, the bill still bakes in preferential discounts and explicitly spreads the impact of those discounts across all customer classes, creating a hidden cost shift onto ordinary Missouri families and small businesses.