Don Mayhew believes in the free market.
“We have choice in a lot of different things. Go to a grocery store — there's four different brands of green beans you can buy,” Rep. Mayhew, R-Crocker, said. “We know that competition in any marketplace is the foundation — the cornerstone — of our capitalist system.”
That’s why Mayhew, who represents a mostly rural House district that runs from the Lake of the Ozarks to Fort Leonard Wood, has proposed a bill that aims to break up Missouri’s monopoly utilities. Mayhew said it’s an effort to combat rising electric bills.
“Most of the cost of electricity to the consumer is in that power production end. So you put competition there,” he said.
Whether such a proposal would keep costs down is unclear, and Missouri’s largest electric companies — Ameren and Evergy — are against it.
Currently, corporate energy companies in Missouri are vertically integrated, an economic term that means they both make energy and distribute it to customers. Under Mayhew’s plan, the companies could do one or the other.
“The whole goal is to provide competition in the system to help regulate exorbitant fee increases,” he said.
As “natural” monopolies, electric utilities are subject to state oversight in exchange for being the sole provider of service in an area. Since market forces don’t exist to enforce quality, affordability and reliability, those responsibilities lie with state public service commissions.
If Mayhew’s proposal becomes law, corporate utilities operating in Missouri, such as Ameren and Evergy, would have to sell off their power plants, and other energy producers would be able to enter the market.
But Rob Dixon, Ameren Missouri’s vice president of legislative and regulatory affairs argues that could lead to higher utility bills.
“When that happens, control over generation and electricity prices shift away from our state to external entities, raising costs for customers,” Dixon said.
Mayhew hopes over the long term that competition would keep Missourians’ electric bills under control. He knows his opponents are skeptical.
“They say, well, ‘electric prices don't go down whenever you institute this.’ They're probably correct,” Mayhew said. “But keep in mind, the electric rates don't go down without it either and so now we're just quibbling over the rate at which they increase.”
What does 'restructuring' or 'deregulating' mean?
More than a dozen states and Washington, D.C., have what’s called “restructured” or “deregulated” electric utility systems — including Illinois, Texas and Pennsylvania.
That means policymakers have separated energy generators, those that produce power, from the utilities that transport the electricity.
Kent Chandler is resident senior fellow at the R Street Institute — an economically center-right think tank — and the former chairman of the Kentucky Public Service Commission, the agency that oversees that state’s utility rates.
As electricity prices rise, so has public frustration over the growing costs. Chandler uses a political metaphor for the position monopoly utilities find themselves in.
“You never want to be the incumbent party at midterms because everybody votes out the incumbents,” he said.
Charles Hua is executive director of PowerLines, a national energy consumer education nonprofit that has been tracking increasing rate requests utilities submit to regulators.
He said those rising electricity prices have caught the attention of lawmakers from both parties across the country.
“Suddenly you have a lot more elected officials and politicians that are concerned about this issue and feel a need to express their action plans, their proposals for how they're going to tackle this,” Hua said.
Although converting to this type of electricity marketplace is sometimes called “deregulation,” Hua cautions against that term.
“You're not escaping regulation. It's just you're restructuring the market,” he said.
Hua’s organization works to teach people how to get involved in cases before state energy regulators by attending hearings and testifying about their experience with utility services and prices.
He believes public service commissions are supposed to serve customers first and foremost.
“Somewhere along the way over the last century we've lost sight of that mission,” Hua said. “We're seeing the consequences now where utility bills are skyrocketing and utility rate increase requests are going through the roof.”
As a former public service commissioner, Chandler said the tools available to most utility regulators across the country are insufficient to protect consumers against the drawbacks of a monopoly system.
“In my best day as a regulator, I still couldn't hold a candle to the forces for good that competitive markets can create,” he said.
But Ameren’s Dixon believes Missouri’s regulated energy industry is working as it should and is keeping electricity reliable for both current and future needs.
“The regulations that we have in Missouri have done a good job of keeping rates as low as possible while we make investments in the energy grid to make sure that (for) Missourians, the lights come on when they hit that switch,” he said.
What the numbers say depends on who’s asked. Dixon points to research done on behalf of an organization representing investor-owned utilities that shows electricity prices are not going up nationally, but instead affect just a few states and regions.
“We are the 12th lowest state in the entire country for rate increases, and Ameren Missouri's rates are 27% lower than Midwest and national averages,” he said.
But data from the federal government analyzed by the Retail Energy Advancement League — a pro-deregulation organization — shows that since 2008, the states where electricity prices increased the fastest were vertically integrated. Missouri is fifth on that list.
Dixon said he hears the public’s growing concerns about the rising cost of living and higher prices.
“I absolutely understand just the pocketbook issues that folks feel in their daily lives. But enacting legislation like this is not the answer,” he said.
Advice from a neighbor
Illinois saw a similar push to change how its utilities operate in the late 1990s. Citizens Utility Board of Illinois Executive Director Sarah Moskowitz said it came after years of consumer frustration from spiraling electricity prices driven by inefficient generation.
“It's a move that made a lot of sense at that time but I wouldn't say it's a panacea for anybody,” she said.
Moskowitz said in the years since Illinois restructured its utility system, the dream of heading to the market to shop around to find the best deal on energy worked — at least for the state’s largest electric consumers, such as manufacturers.
“It's definitely not so easy for the small energy user, someone who uses just a house worth or an apartment's worth of energy,” she said.
Moskowitz said when Illinois markets opened up, residents got scammed into signing up with overpriced alternative energy suppliers. Illinois has since passed further consumer protections into law, but Moskowitz said she’s still seeing “a lot of really bad deals out there.”
“If you undertake this journey in Missouri, you need good consumer protections in place … and there also needs to be a lot of really individualized one on one consumer education to make sure that people aren't walking into rip offs,” she said.
Ameren operates in both Missouri, a vertically integrated state, and Illinois, a restructured state.
Dixon said a restructured market would come at the cost of reliability for Missouri. He points to what happened in Texas during a 2021 winter storm when temperatures dropped to extreme lows, resulting in widespread power outages and monthly electric bills in the tens of thousands of dollars.
“Generators failed their state and Texans paid the price, and we don't want that to happen here in Missouri,” he said.
But what will it cost?
Most businesses in a capitalist economy aim to produce the best product for the lowest price, in hopes consumers will choose their product over those of competitors. Essentially, doing a thorough and efficient job leads to profits.
But R Street’s Chandler said since electric monopolies earn a return on investment, they’re not incentivized to run power plants efficiently and pass savings that could come from that on to customers.
“Electric utilities are only incentivized to just invest, invest, invest,” Chandler said. “They make money the less efficient they are. If they need two power plants instead of one, that's great, because they make a return on both of them.”
He said that has had a measurable impact on prices.
“States that have restructured and have quality retail competition have seen prices go up far slower than states that stuck with their vertically integrated utilities,” Chandler said.
Dixon disagrees.
“All you have to do is look around the country to see how this type of legislation works in other states,” he said. “Restructuring the market isn't a one way ticket to reducing costs. In fact, it really is just the opposite.”
In an email, spokesperson Gina Penzig said Evergy — the electricity provider for a large portion of western Missouri — also believes deregulation would be bad for Missouri residents.
“If Missouri were to de-regulate, it would result in higher prices and a less stable grid,” she wrote.
One challenge is that since the technology used to make and deliver electricity is always changing, experts say so too must the way it’s managed.
“We're never going to arrive at a solution that's going to work permanently,” Moskowitz said. “We need to remain nimble, and we need to continue to think creatively about how to make our power system and the regulations that apply to it work for consumers.”
Deregulation or re-regulation
Although there was a wave of restructuring in the 1990s, not many states are making moves in that direction now. In fact, utilities in “deregulated” states are making a push to get back into the electricity generation business — what’s called “re-regulation.”
Left-leaning think tank the Center on Budget and Policy Priorities recently published a report on the steps state lawmakers could take to address increasing electricity costs.
Rachel Jacobson is the organization’s lead researcher for state climate policy and the report’s co-author. She said the research is very mixed on whether breaking up electric monopolies has a significant effect on what customers pay each month.
“Ultimately, we believe that the risk of consumers getting hurt in re-regulation is high enough that we oppose those proposals,” Jacobson.
Recent changes to Missouri utility law
Mayhew has proposed legislation to break up electric utility monopolies for four years in a row.
“Senate Bill 4 came along in the meantime, which puts rate increases on steroids,” he said.
He’s referring to a massive utility bill passed last year and signed into law by Gov. Mike Kehoe.
The law, which Mayhew voted against, gives utilities a variety of new financial accounting practices, including authorization for a policy called “construction work in progress” that enables energy companies to earn revenue on power plants as they build them — a potentially yearslong process during which no additional electricity is made.
“We have pretty much turned all of that oversight that we would have normally had in that process over to the investor-owned themselves, who's, let's face it, and I don't blame them for this, are more concerned about the bottom line of their stockholders than they are about increases in rates associated with cost overruns,” Mayhew said.
Mayhew’s 2026 legislation to break up monopoly utilities has yet to receive a hearing.
