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A proposed bill in the Missouri legislature would allow utility companies to surcharge customers for upgrades and building new plants. As investors, let's see how this affects publicly traded companies.

The two largest utilities in Missouri, Ameren (AEE) and Great Plains Energy (GXP) would benefit from this proposed law. Recent articles from Seeking Alpha on the merits of these two stocks can be found at links for Ameren and Great Plains.

The proposed law would allow these utilities to pay for things like new polls, upgrades to the smart grid, compliance with the EPA, and building power plants. Great Plains is looking to spend approximately $1 billion on new scrubbers and other upgrades at its coal-fired plants. In a few years, it wants to produce 600 mega-watts of electricity by wind and hydroelectric in Missouri and Kansas. This is a lot of renewable energy! With the new EPA regulations that are cracking down on coal, Great Plains needs to diversify its energy base. The company is 83% coal, 13% nuclear, and 4% wind and hydro.

Ameren produces 10.85 gigawatts of electricity total with 6.6 gigs in Missouri. The company is looking to spend $3.35 billion in capex in Missouri and $4.75 billion in Illinois, over the next four years. Illinois does allow surcharges for improvements to the smart grid. Ameren recently offloaded 4.75 gigs of coal-fired plants in Illinois, to Dynergy (DYN).

Ameren and Westinghouse have been trying to raise funds to produce a 225 megawatt mini nuclear reactor in Callaway County, Missouri, but were passed over by the Department of Energy. Callaway County is home to Ameren's 1.19 gigawatt nuclear plant built in 1984.

So who is against this law? Consumers of course. The largest user of electricity in Missouri, is Noranda Aluminum (NOR). Every time that Ameren tries to push through a rate increase through the Missouri Public Service Commission, Noranda fights. In 2011, Ameren asked for 11% but only got 5.2%. The AARP states that surcharges reduce incentives for utilities to control costs.

It's difficult to gauge whether or not this bill will pass. It has in other states. Should this bill pass, it could portend good things for the stocks of Ameren and Great Plains.

Source: New Law In Missouri Could Help Utilities