Legislation that would allow Missouri utility companies to speed their transition to renewable energy is on its way to Gov. Mike Parson’s desk just a day before the General Assembly’s session ends.
The Missouri House voted 146-1 Thursday in favor of a policy — also adopted earlier this year in Kansas — that would allow utility providers, like Ameren or Evergy, to refinance and shutter coal-fired power plants faster without taking a big financial hit.
The Senate passed it unanimously later in the day.
The proposal, known as “securitization” is the rare issue that brings together monopoly utility companies, environmentalists, and industrial groups. Advocates say it would be a game-changer for the environment, incentivizing utility companies to stop using coal, which releases huge amounts of greenhouse gases, when it otherwise might not make financial sense. Proponents also argue it will save Missouri residents huge sums on their utility bills.
Evergy and Ameren have both supported the legislation, though neither company has said whether it will use the tool to retire additional coal plants beyond the ones that have already announced.
“But all indications are from talking to them that if this law passed they would seek to use it to accelerate some of their timelines,” said James Owen, executive director of Renew Missouri, which advocates for the use of renewable energy. Owen said the legislation could be “transformative” for the state’s utility landscape.
Securitization essentially allows utility companies to refinance the debt they took on to build or improve coal-power plants much like someone would refinance their mortgage. A third party issues bonds to repay the utility’s investment in the facility, and ratepayers pay back those bonds at a lower interest rate than the utility was originally set to earn on the investment.
Retiring those coal plants, which environmental groups say are expensive to operate and maintain, also allows the utility to invest in more renewable energy.
Ameren pledges to reach net-zero carbon emissions — even without securitization — by 2050. It plans to retire all its coal-fired plants by 2042.
Evergy pledges net-zero by 2045, again, without securitization. But it plans to operate some coal plants beyond 2040.
But coal is still the largest single source of energy for both companies. Burning coal releases even more carbon dioxide than other fossil fuels, like natural gas or diesel, releasing more greenhouse gases that contribute to climate change.
The bill doesn’t require utility companies to retire coal plants. And neither Evergy nor Ameren accounted for securitization when they filed “integrated resource plans” with Missouri regulators because the legislation had yet to pass.
The IRPs, essentially five-year capital plans, were issued in 2020 Ameren and last month for Evergy. Collectively, the two companies are only looking at retiring two coal plants by 2025 — the Lawrence Energy Center in Lawrence, Kan., and the Meramec Power Plant in St. Louis.
Neither company immediately returned a request for comment Thursday.
Andy Knott, deputy regional director for Sierra Club’s Beyond Coal Campaign, called securitization a “win-win-win.”
Sierra Club chapters in both Missouri and Kansas have been pressuring the utility companies to retire more coal plants, saying coal is the “dirtiest” fossil fuel there is with the worst carbon footprint. Knott noted both Evergy and Ameren have released plans to reach net-zero carbon emissions in the coming decades — even without securitization.
“But now that it has passed, they should go back and take another look at those plans and see how they can use this new tool to accelerate the transition from coal to clean,” Knott said.
The bill also contains a provision unpopular with environmental groups that would bar local governments from prohibiting any particular type of energy from being connected to a customer’s home or residence. It essentially prohibits cities from requiring that new buildings be powered only with electricity, not natural gas.
Berkeley, California, was the first city in the nation to adopt a rule requiring that all new buildings be powered with only electricity and not be built with gas hookups.
“Preventing municipalities from moving towards efficient electrification of buildings is the opposite of the direction we need to be going to avert the worst impacts of the climate crisis,” Knott said.