** Kehoe signs law likely to increase utilities’ profits, Missourians’ utility bills ([link removed])
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By Jonathan Kim on Apr 22, 2025 02:03 pm
Missouri Governor Mike Kehoe signed off on his first major energy package earlier this month, a suite of policies likely to increase Missourians’ utility bills and corporate utilities’ profits, reflecting his deep ties ([link removed]) to the industry.

Kehoe signed ([link removed]) Senate Bill (SB) 4 ([link removed]) —the Missouri legislature’s omnibus utility bill—into law on April 9. The bill, led by Republican State Senator Mike Cierpiot and pushed ([link removed]) by the state’s utilities, was roundly criticized by consumer advocates ([link removed]) , environmental groups ([link removed]) , and major energy users ([link removed]) as likely to raise rates for Missourians to the tune of $1,115 annually
([link removed]) for Missouri households.

“These monopolies are going to be able to pull a billion dollars out of my constituents’ pockets and transfer it to stockholders of these companies,” State Senator Tracy McCreery, a Democrat, said ([link removed]) . While she negotiated some consumer protections into the bill, McCreery cautioned that they are not enough to offset SB 4’s significant impacts on utility costs.

The legislation has dozens of provisions, but the dominant drivers of customer cost increases are construction work in progress (CWIP), which allows utilities to charge for electricity generation plants before they are in service, and future test years for gas and water utilities, which allow utilities to use projected rather than actual costs when setting rates.


** A bill by and for utilities
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Missouri utilities including Ameren, Evergy, Spire, Summit, and Liberty and allied trade associations, front groups, and unions lobbied for SB 4 ([link removed]) . These same utilities also donated more than $400,000 ([link removed]) to Governor Kehoe’s gubernatorial campaign ahead of his election last year.

While utilities lobbied in Jefferson City, Edison Electric Institute ([link removed]) (EEI)—the trade association for electric utilities—paid for dozens of Facebook ads ([link removed]) asking Missourians to lobby their legislators to pass SB 4. Consumers Energy Alliance ([link removed]) , a a group funded by utilities and fossil-fuel associations, has lauded ([link removed]) the bill’s passage.

The upside for utilities and shareholders is clear. Investor analysts that closely follow the utility industry and advise shareholders expect SB 4 to boost utilities’ corporate profits ([link removed]) , deeming ([link removed]) SB 4 as “constructive” for utilities’ earnings and saying ([link removed]) it will “​​enhance cash flow and extend earnings growth” for Missouri’s utilities. On an earnings call with investors, Evergy CEO David Campbell lauded ([link removed]) SB 4 as “transformative”.
But while utility profits are projected to increase, so will Missourians’ utility bills. Consumers Council of Missouri expects ([link removed]) the law to result in at least a $1,115 annual bill increase for households; the Missouri Industrial Energy Consumers estimates ([link removed]) that the new law will raise rates between 40% and 80%.


** Unusual advocates for utilities
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Among those specifically testifying in favor of CWIP was Kayla Hahn ([link removed]) , the Chair of the Missouri Public Service Commission (PSC), the state’s utility regulator. Public utility commissioners often testify to legislative committees about complex regulatory matters. It’s less common for them to take clear advocacy positions, and particularly unusual for a regulator to advocate for a policy that removes some of their own discretion.

At least some legislators were surprised by Hahn’s lobbying, as former State Representative Jeanette Mott-Oxford made clear, saying ([link removed]) : “I’ve never seen this before… I’ve been coming to this building for hearings since 1992, and I’ve never seen a member of the PSC testify for or against [CWIP].” Another observer noted ([link removed]) that Hahn’s advocacy is “like having a government official lobby for the utilities.”

Hahn attended the bill signing for SB 4 and stood behind the Governor’s desk with Cierpiot and Hurlbert—the bill’s Senate and House sponsors—as well as Kehoe.

Hahn is no stranger to breaking precedent. Consumer and environmental advocates criticized Hahn last year ([link removed]) for going behind her colleagues’ backs to encourage the previous governor to veto a provision that would have required utilities to file more rigorous reporting of service disconnections.

Sen. Mike Cierpiot, SB 4’s senate sponsor, has his own ties to the utilities. Cierpiot’s chief of staff, Michelle Pleus, is married to Spire’s Director of Government Relations and lobbyist ([link removed]) Larry Pleus. Larry Pleus testified ([link removed]) in favor of SB 4 at its hearing in the Missouri Senate’s Commerce, Consumer Protection, Energy and the Environment committee, while Michelle Pleus was listed ([link removed]) in the committee’s minutes as staffing the bill.


** Shifting risks to customers with construction work in progress
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One of the significant drivers for increasing customer bills in SB 4 is the enabling provision for construction work in progress (CWIP) charges. Under the new law, utilities can charge customers for a power generation facility before that facility has come online and is generating electricity, forcing customers to pay for a facility from which they aren’t yet receiving service. Since CWIP forces customers to pay for new generation facilities throughout the construction process, CWIP ensures that if the project goes over budget that customers—rather than utilities—are stuck with the tab. This shifting of financial risk to customers creates a moral hazard, reducing the incentives for utilities to minimize expenses in the construction process and allowing them to undertake riskier projects without absorbing the risk themselves.

The passage of SB 4 unwinds a longstanding CWIP prohibition in Missouri. In 1976, Missouri voters opted to disallow the practice through a ballot initiative that won 63% ([link removed](1976)) of the vote amid concerns about the costs ([link removed]) associated with building the then-new Callaway nuclear facility.

In other states, CWIP has proven costly to utility customers ([link removed]) . CWIP resulted in the notorious VC Summer nuclear plant boondoggle ([link removed]) in South Carolina, where customers were forced to pay billions of dollars for a nuclear facility that was never completed. The Missouri law includes a clawback provision for such cases, where if a facility is not completed, then utilities must repay their ratepayers’ CWIP payments with interest. Consumer advocates are skeptical that these protections are sufficient, ([link removed]) and asked lawmakers to reject CWIP even with the clawback provisions.

VC Summer is not the only boondoggle to result from CWIP. CWIP was also used for now-in-service nuclear and experimental gas plants in Indiana ([link removed]) , Georgia ([link removed]) , and Mississippi ([link removed]) —each of which came in billions of dollars over budget and years behind schedule. As a result, utility customers face massive charges for these high-risk projects, while utilities remain insulated from the financial risk. In these scenarios, it would be up to Hahn’s PSC to disallow CWIP for the utility under SB 4.

The proponents of Missouri’s CWIP law insist the policy will not pose the same risks of nuclear cost overruns as in other states. But at least one Missouri utility’s public statements raise doubts about that.

Republican State Representative Josh Hurlbert, who sponsored SB 4 in the Missouri House, claimed ([link removed]) that CWIP “is not going to be used on anything nuclear like we’ve seen with some projects in Georgia and South Carolina.” Sen. Cierpiot similarly said ([link removed]) of using CWIP for nuclear generation: “I think that means no company is going to take that risk.” But in its most recent integrated resource plan, Ameren made clear ([link removed]) it is “planning for 1,500 MW of new nuclear energy generation by 2045.” Ameren also told shareholders
([link removed]) in March that it is “targeting the addition of 1,500 MW of nuclear generation by 2040.”

Advocates and critics of CWIP in Missouri have highlighted the risks that CWIP for new nuclear facilities would pose to customers. New methane gas plants, including several proposed by both Ameren ([link removed]) and Evergy ([link removed]) , have also seen increasing construction costs ([link removed]) that could invite similar risks to ratepayers.


** Trusting utility projections with future test years
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Another provision included in SB 4 requires implementation of future test year ratemaking for gas and water utilities. Where Missouri utilities previously had to cite actual past expenses in justifying their requests to raise rates, they will now have the flexibility to make their own predictions about future costs they will then charge to customers.

Because customers’ rates are, roughly, the total expenses divided by the total sales, future test years incentivize ([link removed]) utilities to overestimate their projected costs and underestimate the amount of demand for their services. Since utilities have substantially more information about their own planning, modelling, and ratemaking processes than consumer advocates and even the PSC, these over- and under-estimates are difficult to catch ([link removed]) and are likely to lead to unnecessarily high rates.

While the future test year provision in SB 4 only applies to gas and water utilities so does not change electric ratemaking, the electric utilities may push for similar treatment in the future. Speaking at a National Association of Regulatory Utility Commissioners event in February, Ameren Missouri President Mark Birk was enthusiastic about the prospect of future test years for electric utilities.

“We’d love to have [future test year] in electric also, but we recognize you have to earn some of that, and we believe that we do that every day by building the relationships [with regulators and legislators] and continue to make them better,” he said.


** Mandating energy sources
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An additional component of SB 4 is a so-called “Watt for Watt” ([link removed]) policy that requires utilities to replace existing power generation capacity that is set to be retired with “dispatchable” generation, meaning power sources that can be turned on or ramped up on demand, such as nuclear, methane gas, or coal power plants—though battery storage also meets this definition. The requirement is also likely to increase customers’ rates.

By limiting the choice of generation resources for utilities to those deemed “dispatchable,” SB 4 disfavors utility-scale wind and solar projects that are often a cheaper alternative. Watt for Watt requires utilities to build more expensive generation facilities, likely methane gas plants, of questionable need, which expose customers ([link removed]) to volatility in fuel prices and capital markets.

Missouri currently has relatively low renewable energy penetration—about 12% of electricity generation ([link removed]) , suggesting its grid could accommodate far more with little concern for the portfolio’s overall reliability. Neighboring states of Kansas and Iowa generate 46% ([link removed]) and 55% ([link removed]) of their electricity from non-dispatchable renewable energy sources, respectively.


** A high-risk time for Missouri ratepayers
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The policies in SB 4 that will likely lead to higher rates come at a tumultuous time for ratepayers. The Low Income Home Energy Assistance Program (LIHEAP), on which many low-income Missourians rely ([link removed]) to pay their bills, is under increasing threat from the Trump Administration. In a round of cuts to the Department of Health and Human Services, Secretary Robert F. Kennedy Jr. fired every staff member in the LIHEAP office, leaving no one to administer disbursement of the funds ([link removed]) . Additionally, a proposed Trump Administration budget reportedly entirely eliminates funding for the program ([link removed]) . When EPI reached out to
([link removed]) Missouri’s three largest utilities about the LIHEAP staffing cuts, Ameren did not respond, Evergy pointed to EEI for comment, and Spire declined to comment beyond saying it was “analyzing this information.”

Even before the recent LIHEAP cuts, many Missourians were already struggling to pay their utility bills. From March of 2024 through February of 2025, Ameren disconnected more than 96,000 customers for non-payment, with as many as 21% of their customers in arrears during that timeframe. Evergy reported disconnecting more than 35,000 customers in the same span, with between 15% and 19% of their customers in arrears in their Kansas City and Salisbury service territory ([link removed]) and 10% to 12% of their Chillicothe, Clinton, and St. Joseph service territory ([link removed]) customers in arrears.


** Pro-consumer concessions not expected to offset costs
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Although SB 4 heavily favored utilities, McCreery—the Senate Democrat who took a leading role in negotiations—won some concessions for consumers. The new law increases the amount of ratepayers’ money that the utilities must contribute to fund the PSC, and newly requires utilities to contribute ratepayer funding to the Office of Public Council, the state agency which represents consumer interests in PSC proceedings.

The legislation also strengthens temperature-based utility shutoff protections, prohibiting disconnection when extreme heat or cold is forecasted in the next 72 hours. The previous standard was based on temperatures forecasted within 24 hours.

SB 4 also allows, but does not require, the PSC to consider creating a separate rate class for customers that are overburdened by utility bills, which could pave the way for alternative or discounted rates based on the percentage of income paid by a customer to a utility. While she lauded the protections, McCreery said they were not sufficient.
“There was nothing I was able to get into the final version of the bill that will offset the negative impact on Missourians,” she said ([link removed]) . “And I’m not exaggerating when I say this bill will, with 100% certainty, increase what people are paying for their gas and their water and their electricity, and in some communities, their sewer.”

Photo credit: Office of Governor Mike Kehoe ([link removed]) via Flickr

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