The Associated Press July 12, 2010, 10:28AM ET

Analysis: Implementing Mo. energy law proves tough

Missouri voters in 2008 faced a relatively simple choice of deciding whether to require that more electricity be produced through renewable energy. But giving the people what they wanted has been a lot more complicated.

The 2008 law requires investor-owned utilities to use renewable energy sources for at least 2 percent of their electricity by 2011, 5 percent by 2014, 10 percent by 2018 and 15 percent by 2021. Utilities also cannot raise electric rates by more than 1 percent to comply with the new law.

Sounds straightforward. But implementing the requirements has taken more than cocktail-napkin math to figure out how much of the utilities' electricity will be generated from renewable energy sources and how much customers can be billed.

"We think things are simple, we want to do this," said Jason Hughes, the clean energy coordinator for Renew Missouri, which backed the ballot measure. "But when you get down to how to technically do it and all the moving parts, it gets complicated."

Regulators, utilities, consumer advocates, renewable energy promoters and others studied the ballot measure and attempted to piece together what voters thought they were doing. More than a year later, a divided Missouri Public Service Commission submitted to the secretary of state's office its rule for the renewable energy mandate. The rule is to take effect Sept. 30.

A legislative committee already has rejected part of the renewable energy rule, and a spokeswoman for the secretary of state's office said that portion would not be published.

"It's very complicated, and we had a lot of interest," said Robert Clayton, chairman of the Public Service Commission. He said there had been controversy and that state law might need to be clarified.

A lawsuit over the energy rules also is likely.

Yet, the idea of using more renewable energy is popular. Utilities in 2008 supported or remained neutral on the ballot measure and about 66 percent of voters -- nearly 1.8 million people -- voted for it. In fact, the law was favored in every county but Osage County, just east of Jefferson City.

Part of the challenge is that the law approved by voters -- like many state statutes -- sets up the outline. Developing the procedures to make the energy requirement work is left to the administrative rules developed a state agency.

Voters saw on the ballot about 100 words that explained the renewable energy idea. The actual law they approved fills in more details and is about 1,000 words long. But the administrative rules to implement the measure now are about 10,000 words.

Put another way, the electorate circled a spot on a map and declared it the destination. Regulators, utilities, consumer groups and others have worked to plot the course while figuring out how to traverse the mountains, rivers and other obstacles in the way.

And there is unhappiness with the route.

For example, regulators decided in the rules that increases in electric rates would be capped at an average of 1 percent over 10 years. If meeting the renewable energy requirement would cost more than that, utilities must ratchet down the amount renewable energy sources they use.

The backers of the ballot measure support that and argue it will help promote renewable energy, but utilities and energy users argue it is not what voters thought they were getting.

Warren Wood, the president of the Missouri Energy Development Association that represents investor-owned utilities, contends voters believed they were guaranteeing they would not pay more than 1 percent for electricity if more renewable energy was used.

"At some point in time, someone is going to get a calculator out -- and if the rule operates as it is written -- they will take the number and check the bill and go, 'This isn't 1 percent. This is several percent,'" Wood said.

By one calculation, electric rates in 2014 could increase by around 5 percent but could be counted only as a 0.7 percent increase under the rule, because the increase would be averaged over time.

Another disputed detail is whether to let utilities count electricity that comes from wind farms and solar cells in other states and does not necessarily get used in Missouri to power TV sets, computers and lights.

Under the law approved by voters -- but not included in the summary that appeared on their ballots -- utilities are allowed to buy "renewable energy credits" that represent electricity produced through renewable energy sources. The law offers a bonus for credits that come from Missouri producers.

Utilities and energy users contend that buying a renewable energy credit -- no matter where the energy is produced or used -- meets the goal of promoting renewable energy and should be counted. Renew Missouri counters that energy sources for the requirement need to have some link to Missouri, because one goal of the ballot measure was to create jobs by developing a renewable energy industry in the state.

It's a split that illustrates the difficulty of working out the details and demonstrates that sometimes, it is a lot easier to pick the destination than to navigate the terrain to get there.

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EDITOR'S NOTE -- Chris Blank has covered state government and politics for The Associated Press since 2005.


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