Missouri Plan for Peak Power Pricing Prompts Pushback Time-of-Use Pricing to Affect Bills

Over the objections of Evergy Missouri, staff with the Missouri Public Service Commission last year pushed for power prices to be based on the time of day when the electricity was consumed, with a small premium for use at peak times.

The commission, known as the PSC, adopted the concept but not the particulars, opting instead for a big difference at peak times rather than the “training wheels” approach recommended by commission staff.

And that’s why in June, Evergy customers in Missouri learned that power used from 4 p.m. to 8 p.m. in summer months will cost four times more than the other hours of the day. 

The idea was to get people’s attention — and it worked. 

But it also got the attention of Senate Majority Leader Cindy O’Laughlin, who said she fears customers will be hit with massive bills.

In a series of Facebook posts earlier this month, O’Laughlin accused the PSC of seeking to ration power, gouge customers and force a conversion to solar and wind power.

“This rate increase is going to be terrible,” O’Laughlin said in an interview last week with The Independent. “What they’re actually trying to do is get people to ration how much energy they use, because they want to move to, you know, green energy, and they understand that the grid cannot serve all the demands and I find that not just objectionable, but unconscionable.”

The policy has nothing to do with power rationing or whether power comes from solar, wind, coal or gas, PSC Chairman Scott Rupp said in an interview. Instead, he said, time-of-use pricing gives consumers more control of their utility costs.

“That allows price signals from the free market to be delivered to the consumer and then they can react accordingly,” Rupp said.

The commission isn’t stopping with Evergy Missouri, which has 640,000 power customers in two service regions of western Missouri. Utilities are installing smart meters that can allow constant monitoring of electric use and customers are paying for them as part of their base charge.

Ameren Missouri residential customers in eastern Missouri will receive notices soon that on April 1, they will be in a rate plan that has peak summer prices more than three times higher than other hours. And Rupp said Liberty Utilities’ customers in southwest Missouri will see a similar design when it is next up for a full rate review.

While every utility will also offer alternative rates, the commission overruled a staff recommendation for small differentials in default plans that would introduce more customers to the concept without major disruptions.

“The basis for staff’s low differential proposal is that it is the ‘training wheels’ approach for introducing (time of use) rates to customers that currently are not and have never been enrolled in Evergy’s (time of use) pilot,” the commission’s December order states. “Staff’s low differential rate, even though it would provide protections to some customers, does not provide sufficient incentive or opportunities for customers to see savings from (time of use) rates.”

Evergy didn’t want mandatory time-of-use rates at all. In a statement, spokeswoman Gina Penzig said the company preferred for the rates to remain voluntary.

“Evergy has offered voluntary time-base rate options for several years because we see value in providing rate options for our customers,” Penzig wrote in an email. “We feel strongly that time-based rate plans should be voluntary and we advocated for that choice in our last rate case.”

Rupp, however, said Evergy has been installing the smart meters for years and most of the benefits, such as being able to remotely disconnect customers for non-payment, have flowed to the utility.

“Eventually we came in and said, ‘you’ve been promising for eight years and now you’re doing it.’” Rupp said. “‘You have the fancy toy that’s attached to the house. You’ve got to start using it to benefit the customer.’”

Who Will Pay?

Mandatory time-of-use pricing will only apply to residential customers of regulated utilities who have smart meters. 

Evergy has two service areas, Evergy Missouri Metro and Evergy Missouri West. About 98% of residential customers of Evergy Missouri Metro, a 13-county area that includes Kansas City,  and close to 60% of customers of Evergy Missouri West, a 31-county area.

Evergy already has an optional time-of-use plan but only 1.1% of customers were enrolled when they filed for a rate increase in early 2022.

Ameren has installed smart meters for about three-quarters of its customers, said Steve Wills, director of regulatory affairs for the utility. It intends to have all residential customers converted by the end of 2024, he said.

Liberty, also known as Empire District Electric Co., introduced time-of-use rates in the rate design approved by the commission in early 2022. The rates took effect in October and provided a discount for power consumed between 10 p.m. and 6 a.m. as the default time-of-use plan.

The PSC can only require time-of-use rates for the investor-owned, for-profit utilities it regulates. Almost all the customers those utilities serve live in incorporated cities and towns.

Missouri has two other types of electric providers, rural electric cooperatives and municipal utilities. 

Rural electric cooperatives serve unincorporated portions of most counties. Their rates are set by boards elected by the customers, who are also owners and receive distributions when revenues exceed costs.

Two of the state’s largest cities, Springfield and Columbia, have municipal utilities and rates are set by the city councils in those communities.

How Much Will it Cost?

When the PSC decides a rate case, a news release issued to report the decision will state how much more or less revenue the utility will obtain from customers and the impact on a residential user.

For electric power cases, that cost is stated as the difference for a home that consumes 1,000 kilowatt hours per month. When it decided the Evergy Missouri case in December, the PSC reported that household would pay about $3.75 a month more in Evergy Missouri Metro areas and $4.50 more in locations served by Evergy Missouri West.

But those figures don’t give the cost of a typical bill and, under the four pricing options offered, no bill is likely to be typical.

Under traditional utility pricing the meter is read once a month and the customer pays a flat rate. Sometimes it varies based on total consumption, with higher consumption sometimes coming at a cheaper cost. Some set summer rates higher because of higher total demand and the extra cost to supply it.

Evergy customers who do not have a smart meter will remain on a traditional plan that would cost about $116 a month for 1,000 kilowatt hours. But no one with a smart meter can choose a flat rate.

Under the default plan, called the Standard Saver Rate, residential customers will pay the highest rates from 4 p.m. to 8 p.m. during summer months of June, July and August and September. During the winter, the time-of-use differential would be for consumption between midnight and 6 a.m., where the price is discounted 50% from other hours.

Power is not consumed uniformly across a day, so it is difficult to compare what a bill under a time-of-use plan would be like. But if it was, that 1,000 kilowatt hours would cost about $144 a month in summer and $99 a month in winter under the default plan.

Under the low-differential Peak Reward Saver plan, uniform use across all hours would cost about $140 a month in summer and $101 in winter.

For Ameren Missouri customers, there are minimal differences between a flat rate plan, which will continue to be an option for customers, and the default time-of-use rate when power use is assumed to be consumed uniformly through all hours of a month.

That 1,000 kilowatt hours would cost a flat-rate customer $137 in summer and $88 in the winter. The default plan, called the Smart Saver service, would cost about $138 in summer and $86 in winter.

“There very definitely will be customers who have saved money, and there will be some customers whose bill is higher,” Wills said. “The best thing that we, as a utility, can do is to do our best to help customers find the right rate so that they will actually save money and give them tips on how to manage their usage to help them save money.”

Why Now?

In her Facebook posts, O’Laughlin attributes the reason for introduction of vastly varying power rates to “woke” policies intended to drive the conversion from fossil fuel power generation to wind and solar resources.

“The PSC is to be protecting and acting in the best interests of the customers and instead they are joining in the ‘Woke’ movement which involves shutting down your power,” O’Laughlin wrote in one post.

Woke policies, she said in an interview, are “government policies that are pushed on to the citizens, that are actually directly opposite of what the citizens need and want in pursuit of a political activist goal.”

In another Facebook post, O’Laughlin said there is no proof of human-caused climate change.

“Nonetheless our schools teach our students we are in imminent danger and weird misfits like Greta Thornburg (sic) run around the world telling us the world will end any minute unless we do what she says,” O’Laughlin wrote.

Solar and wind power is unreliable and can’t replace other power generation, O’Laughlin said.

The push for alternative energy has nothing to do with time-of-use rates, said James Owen of Renew Missouri, a nonprofit that advocates for renewable energy and energy efficiency.

“I have no earthly idea where she has gotten that idea,” he said. “For some lawmakers, renewable energy is an easy foil and Sen. O’Llaughlin is making it an easy foil.”

Renewable energy is actually a cheap source of power that often is providing the most power when demand is peaking. During the recent Texas heat wave, when temperatures exceeded 110 in many locations, solar and wind power provided the extra energy that prevented blackouts and brownouts, the Texas Tribune reported.

Time-of-use pricing “has nothing to do with wokeness has nothing to do with price gouging,” Rupp said. “It’s actually a very free market consumer driven. Hey, here’s the price signals. The prices are super sky high because everybody’s cranking up their air conditioner all at the same time. And if you want to save money, you know you have this opportunity.”

The opportunity, O’Laughlin said, is a chimera. There is one Evergy plan, called the “Nights & Weekends Max Saver” rate, where electricity used between midnight and 6 a.m. is less than 10% of the cost of energy used at peak times.

That plan actually offers little to working people, O’Laughlin said.

 “​​Who in the hell is going to be up doing laundry from 12 a.m. to 6 a.m. and get up for work the next day?” O’Laughlin said. “G–d–n. And you can quote me on that.”

Rudi Keller covers the state budget, energy and the legislature in Missouri for the Missouri Independent, where this story first appeared. Missouri Independent is part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity.