A recent report commissioned by the Consumers Council of Missouri, a consumer advocacy group, shows utility costs in the state have increased higher than the rate of inflation and average wages.
“Both the natural gas and electric rates in our region have been going up faster than inflation,” said John Coffman, an attorney with the Consumers Council.
The report, compiled by Strategen Consulting, shows the national rate of inflation at more than18% since 2020, while the average weekly wage growth for Missouri was just 16%.
Ameren is the electric utility that serves a large portion of central Missouri. They also provide gas for the cities of Columbia and Jefferson City. Between 2020 and 2023, the average summer residential electric bill for Ameren customers rose more than19% and the average winter bill rose by more than 21%.
Strategen concluded that infrastructure investments made by Ameren are the primary cause of the rate increases. Warren Wood, Ameren Missouri’s Vice President of Legislative and Regulatory Affairs, concurs. Wood told KBIA the company is “redoubling” its efforts to provide “highly reliable service,” which means infrastructure replacements and improvements.
Ameren has been upgrading substations, power lines and poles in mid-Missouri, Wood said.
“Replacing older equipment with not just the same stuff, but improved equipment that can better face severe weather, can communicate more rapidly to us if there's an outage occurring so we can fix it sooner. Smarter equipment to reroute power so that some customers won't see an outage where they might have seen one before, and if they do experience it, we're able to restore service to them much faster,” he said.
Wood contends the efforts to improve Ameren infrastructure have been ongoing for a few years, and are paying off now when mid-Missouri faces severe weather. The utility is experiencing fewer power outages and is able to get customers back online sooner when they do occur.
Spire, the gas utility that serves the majority of Missourians, also saw rate increases between 2020 and 2023. Customers in Eastern Missouri saw winter bills rise 62% during that time period, while Spire West customers' gas bills more than doubled since the winter of 2020.
Scott Weitzel is Vice President of Regulatory and Government Affairs for Spire and said the report accounted for average customer usage differently than the utility does, but nonetheless, “our costs have gone up.”
In February of 2021, Winter Storm Uri blanketed Texas with record amounts of snow and also caused a deep freeze over many southwestern states. The nine-day freeze set many records and resulted in $1 billion in damage, according to the National Oceanic and Atmospheric Administration. It also had a ripple effort on the natural gas market and its prices.
“Prices that we have never seen before,” Weitzel said.
“We had cold temperatures in producing areas such as Texas and Oklahoma … and so a lot of that production was frozen in,” he said. “Gas could not be pulled out of the ground to be supplied to interstate pipelines.”
When Spire pays a significant premium on gas due to severe weather, that impacts what customers see on their bill. The price of the gas itself is more than half of the cost customers pay.
“These costs are passed through the customer dollar for dollar,” Weitzel said.
When utilities want to raise rates, they must make a case before the Missouri Public Services commission, the regulatory body that oversees the state’s utility companies. While the cost of distributing energy or gas is often analyzed and revised, utility companies have more leeway with the price of gas, Coffman said.
“When natural gas prices go up, generally, they're allowed to increase them without a full rate case audit, and that can make up more than half of your bill, if not two thirds of your bill.”
‘Recent headwinds’
Since 2020 there have been a number of severe weather events across the Midwest. Those factors impact utility prices and operations.
“I would say all utilities in the state of Missouri - because of recent winter storms, because of geopolitical unrest in the country, because of covid and supply chain - I would say all utilities are probably operating above recent inflation and wages,” Weitzel said.
“We've had some recent headwinds that everyone's trying to manage through and get to an area of where companies and our customers could take a breath and we could start seeing some decreases in bills,” he said.
Wood contends Ameren Missouri’s electric prices are lower than national and Midwest averages. But he said the utilities across the country have needed to raise prices due to a number of factors, including supply, availability, and labor.
“Some of the same factors are affecting us as we invest more in the system for reliability, resiliency and cleaner energy,” Wood said.
Ameren Missouri encourages customers struggling to pay to contact the utility about assistance programs.
Coffman said the Consumers Council of Missouri is in support of rate increases when they are necessary to provide reliable service but “we need good regulation in order to rein in what would otherwise be excessive spending and excessive rates.”
He added that citizens getting involved in their utility’s business before government regulators is a crucial part of democracy.
“The level of rates are driven by decisions made by government officials. They (Missourians) should take every opportunity to comment when there is a rate case at the Public Service Commission, if there's an opportunity, they should raise their voices and comment.”
Correction: An earlier version of this story stated Spire enacted rate increases of more than 60%. It should have said winter utility bills for Spire customers increased between 62% and 109% in the winters since 2020.
