Missouri and Kansas utilities back bills to restore monopoly on transmission projects

Missouri’s largest electric utility believes that a bill designed to reduce competition and give monopoly providers advantages in building transmission lines will avoid cost overruns and deliver better results for customers.

In its home state, where it could benefit, Ameren Missouri has offered its full support for legislation to give the company priority over transmission lines, and said opponents’ concerns about limiting competition are “disingenuous at best.” “.

“Do you want local companies with roots in our state and communities who have an interest in our future, who are building infrastructure for the long-term interests of the Missourians who live here and are building these major transmission projects?” Warren Wood, Ameren Missouri’s vice president of legislative and regulatory affairs, asked at a committee hearing in the Missouri House of Representatives earlier this month.

But in 2016, when Kansas was considering a similar law that would have excluded Ameren from bidding for that state’s utility, the Missouri provider opposed it. She took a position diametrically opposed to the current one and strikingly similar to the arguments, which she called insincere.

At the time, Sean Shukar, Ameren’s senior vice president of transmission business development, said the competition had driven costs down in other parts of the country.

“Concerns about the ability of non-dominant transmission line developers to provide safe and reliable service to Kansas electricity customers are unfounded,” Shukar said. “Ameren’s operating subsidiaries have been providing secure and reliable data transmission across multiple states for many years.”

Both Kansas and Missouri are considering what is commonly referred to as “right of first refusal” or ROFR legislation. Supporters say a federal order opening power lines for competitive bidding hasn’t worked. Even the former federal official who voted for the proposal said it failed.

Both Ameren and Evergy, which serve customers in Kansas and western Missouri, support the idea.

But opponents — an unlikely alliance of consumer and clean energy groups, right-wing free-market organizations and transmission line developers — say the elimination of competition will push up the costs of transmission projects. These costs are then borne by customers in the form of higher rates.

Lawrence Willick testified against the law on behalf of LS Power, which is building transmission lines across the country.

“Of course, monopoly utilities are not happy about having to compete,” he told a Missouri House committee, “and you will hear a lot of disparagement about companies like ours, and I ask you to see them for what they are.” are. These are exaggerations and lies, and really a scare tactic.”

Ameren’s turn

Ameren says the company’s views on opt-out legislation have changed since it opposed the idea in Kansas in 2016.

In a committee hearing in the Missouri House of Representatives this year, Shukar said the policy of the Federal Energy Regulatory Commission, which opened the transmission market to competition about 10 years ago, had failed.

“This bill ensures that… we can continue to make these investments and do it in a way that provides the same safe, affordable and reliable electricity that we have had for over 100 years,” Schukar said.

FERC is considering repealing this policy, although it is facing opposition from the US Department of Justice.

Asked during the hearing if Ameren took a stance on right-of-premises legislation in other states, Shukar told Missouri lawmakers that the company did not. He later wrote to the committee apologizing for the error, confirming his previous testimony in Kansas, and saying that his thinking had changed.

Missouri Rep. Ben Keatley, R-Chesterfield, who asked Shukar if Ameren had previously testified on the bill, said the company’s previous stance was consistent with concerns he has about the bill now.

“The fact that they testified against it certainly adds credibility to the fact that it would be bad for a competitive market,” Keatley said in an interview.

He said there must be a good reason before the government intervenes in a competitive market.

“I don’t think it’s been demonstrated here,” he said.

Missouri Rep. Ed Lewis, R-Moberly, said in an interview that ensuring the state’s utilities build transmission lines means companies will be more respectful and responsive to landowners whose property the lines cross.

The bill also requires utilities building new transmission lines to combine new lines with existing lines—when possible—to avoid having to purchase new easements on landowners’ property.

The counties Lewis represents will host the Grain Belt Express, a high-voltage, multi-state power line that Missouri lawmakers have repeatedly tried to block. The project became a lightning rod and sparked talk of property rights and energy projects.

Lewis didn’t care that Ameren had supported the law in a state where he should have won and had previously opposed it where it didn’t. He said there was no doubt that Ameren would benefit from this legislation.

“What worries me is that an out-of-state company is taking private property rights from citizens both in my area and in the state as a whole,” Lewis said.

Evergi did not comment on the change in the situation with Ameren. Its predecessor, Westar Energy, supported the Kansas law in 2016.

Evergy was formed from the merger between Westar and Kansas City Power & Light.

Costs and delays

Both proponents and opponents of “right of first refusal” law claim that their method provides lower costs.

Ameren cited a report prepared by Concentric Energy Advisors saying that projects completed through the competitive bidding process faced delays and cost overruns.

“It is not clear that lower costs and greater innovation have been implemented on a massive scale,” the report says.

The report was paid for by Ameren and other energy companies in response to a pro-competitive transmission line construction report paid for by LS Power, Ameren said in an email.

Evergy cited the same report in its testimony in support of the law, although it is not listed among the companies that requested the report.

As evidence of the problems the current law is creating for energy infrastructure, Evergy points out that a line designed to connect the Wolf Creek substation in Kansas, which it has been offering for five years, is in a competitive bidding process. The Texas bidder suggested designs that would not work in Kansas, the company said. And the spare parts had to be delivered in eight hours.

Evergy Vice President of Regulatory Affairs Darrin Ives said in an affidavit that the Federal Energy Regulatory Commission’s order to open transmission lines to competitive bidding was intended to “ensure the lowest initial cost.”

“As we now see in our region and nationally, it was a race to the bottom based on perverse incentives and superficial and ineffective price caps,” Ives said.

He said transfer project bids are often “minimalist ‘low’ projects” designed to win a project by promising the lowest price. But often price restrictions on projects do not allow to reduce costs.

Jason Klindt of Evergy said the same thing in testimony on the Missouri bill.

“They are interested in bidding low on a project to get the project,” Klindt said. “We are interested in creating something that makes sense for Missouri. Simply put, it’s the difference between building a custom home and a home you’re actually going to live in.”

Josiah Neely testified against the law on behalf of the R Street Institute, an impartial free market think tank.

Neely, a senior fellow at the organization, cited a study that says competitive bidding can generate cost savings of up to 30%.

He said the bill would create a monopoly on active public service in every state.

“This is bad in principle,” said Neely, “but it is also costly for consumers, because without competition, control over the costs of these projects disappears.”

Kansas Reflector is part of the States Newsroom, a network of newsrooms supported by grants and a coalition of donors as a 501c(3) public charity. Kansas Reflector maintains editorial independence. For questions, please contact Editor Sherman Smith at [email protected]. Follow Kansas Reflector on Facebook and Twitter.

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