Missouri agency looks to cut utility rates for low-income residents
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Missouri agency looks to cut utility rates for low-income residents

Date: November 15, 2012
By: Taylor Beck
State Capitol Bureau
Links: Government Programs, Docket

JEFFERSON CITY - The Missouri Public Service Commission -- the agency determining utility rates in Missouri -- is looking to cut rates for low-income Missourians.

Right now, all customers pay a different price depending on whether they are a home or business owner. This is called a "rate class." Prompted by public hearings across the state, the commission is looking to create a separate residential rate class with a lower rate specifically for low-income residents.

If the commission were to create this new rate class, people like Kathleen Chitwood could see a change in their monthly bill.

"If they wanna lower it? Yes, it would benefit me," Chitwood said.

Chitwood represents low-income residents like herself in Missouri as an alternative board member for the Jefferson Franklin Community Action Corporation. She said the bad economy has put her and many others she works with in a bind to pay for necessities like groceries and utilities.

"Well there's so many people out there. There's elderly out there, there's ... single moms out there that don't have a job or were laid off and they're struggling ... they're really trying," Chitwood said.

Chairman of the House Utilities Committee Rep. Darrel Pollock said he doesn't see the new rate class as something the commission should be looking into.

“My personal opinion is that I know that utility bills are expensive, they’re expensive for everyone," Pollock, R-Lebanon, said. "All hard working people have to pay them."

Pollock also said there are already programs and laws in place already to help low-income residents. The Missouri Department of Social Services offers the Low Income Home Energy Assistance Program (LIHEAP). The program provides financial assistance to help pay heating bills for Missourians October to March based on their income, household size and available resources. Community action agencies in Missouri also help low-income citizens with hefty utility bills.

"Look at ways to lower the cost of energy for all taxpayers and citizens of the state, rather than set up another governmental program of assistance and then that takes our eyes off what I think are goal should be is to drop those energy rates for everyone or make them more affordable for everyone," Pollock said.

The Cold Weather Rule, a law effective November to March, prohibits the disconnection of service when the temperature is forecasted to drop below 32 degrees for the following 24 hour period. It also requires utility companies to notify customers about possible financial help in bill paying.

Charities, such as Heat Up St. Louis, also provide help to low-income residents in paying their heating bills.

Missouri Public Service Commissioner Robert Kenny said there is a large difference between what the commission is trying to do and what these programs offer.

"The main distinction is that those programs will help the consumers after they've ran up a large bill," Kenney said. "What we're looking into is ways in which to prevent them from getting into trouble in the first place."

Opponents are concerned a cut in a rate class for low-income residents will mean a spike in rates for others. Kenney said that while it's possible other rates may rise, "it's really an oversimplification to say 'well, if we set up a low income class then everyone is paying more,'" due to the complexity of determining utility rates.

Kenney said he is hopeful the new class would curb some expenses consumers are already paying, perhaps without realizing it.

When a person does not pay their utility bill, companies write it off as a bad debt expense. This expense is then passed on to other customers' bills.

Kenney said by creating a separate class, those in the low-income class would be more likely to pay their bills because they could afford it, thus lowering this debt expense.

In September the commission created a docket for stakeholders to comment on the possibility of the creation of this new rate class. They asked for input from utility companies and customers as well as lawyers, to see if the creation of a new class is even legal.

Utility companies like Kansas City Power and Light found it difficult to evaluate what a new rate class would mean for them, and wrote their company "does not have the income-related information to distinguish one residential customer from another. As such, the company has no empirical information to compare the costs to serve a residential low-income customer from other residential customers."

The commission is currently reviewing and evaluating the responses. Kenney says the next step for the commission is to hold a face-to-face workshop of all the stakeholders to determine the best thing to do.


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