Missouri’s wholesale electricity prices are projected to rise 74% by 2035, according to Energy Innovation. That trajectory raises operating costs for Missouri businesses, farms, and manufacturers, with downstream risks to jobs, economic output, and the competitiveness of rural and urban business communities.
Household bills are also expected to increase—Energy Innovation estimates roughly $640 more per year by 2035—but the primary near-term concern for the state’s economy is how higher wholesale prices flow through to commercial and industrial tariffs. As utilities adjust rates, businesses face higher production costs, pressure to pass costs on to customers, and potential loss of market share to competitors in lower-cost regions.
Senate Bill 4: Reshaping Missouri's Utility Landscape
The most significant driver of immediate cost increases stems from Senate Bill 4, signed into law by Governor Mike Kehoe in April 2025. This comprehensive legislation fundamentally altered how Missouri utilities can recover costs and set rates, introducing several provisions that shift financial risk from utility companies to consumers.
Construction Work in Progress Charges
The most controversial aspect of Senate Bill 4 allows utilities to charge customers for infrastructure projects while they're still under construction, rather than waiting until completion. This "construction work in progress" provision means Missouri residents are essentially providing interest-free loans to utility companies for major capital projects.
Previously, utilities would finance construction through traditional lending, then request rate increases from regulators after projects came online. Now, customers bear the upfront financial burden, with utilities arguing this approach reduces borrowing costs. Critics contend it shifts construction risk to ratepayers who have no choice in these investments.
Future Test Year Projections
Another significant change permits utilities to set rates based on projected future costs rather than historical, audited expenses. This "future test year" approach gives utilities greater flexibility in rate-setting but introduces uncertainty for consumers, as bills may be based on utility projections rather than actual operational costs.
For businesses and agricultural operations, these provisions accelerate cost recovery into current rates and can amplify wholesale price spikes in delivered tariffs. Energy-intensive sectors—food processing, cold storage, manufacturing, and grain handling—face higher working capital needs and slimmer margins as utilities pass construction and projected cost increases through to commercial and industrial customers.
Federal Policy Changes Amplify Cost Pressures
While state legislation creates the framework for higher costs, federal policy changes are amplifying these pressures through the recently enacted "One Big Beautiful Bill." This federal legislation incentivizes fossil fuel usage while simultaneously removing renewable energy tax breaks that previously helped keep electricity costs lower.
The removal of these renewable energy incentives is particularly significant for Missouri, as it reduces the economic advantages of low-cost wind and solar generation. Without these federal subsidies, renewable projects become less financially attractive, forcing utilities to rely more heavily on higher-cost fossil fuel generation to meet electricity demand and pushing up wholesale market clearing prices. For businesses and industry, greater exposure to fuel price volatility translates into higher and more variable commercial and industrial tariffs.
The timing of these federal changes coincides with Missouri's state-level policy shifts, creating compounding effects that energy analysts describe as unprecedented in their scope and potential impact on retail rates across customer classes.
Projected Cost Impacts: The Numbers Behind the Increases
Energy Innovation, a nonpartisan energy and climate policy research organization, projects that rising wholesale prices will flow through to commercial, industrial, and residential rates. Their analysis indicates cost pressures that could outpace inflation and wage growth without mitigation.
Wholesale Price Surge
Missouri's wholesale electricity prices—the rates utilities pay for power generation—could increase 74% by 2035. Wholesale increases typically pass through to delivered tariffs, raising operating costs for businesses, farms, and manufacturers via both energy and demand charges.
Implications for Missouri Businesses and Communities
- Higher production costs across energy-intensive sectors, including manufacturing, agriculture, food processing, cold storage, and data centers
- Increased likelihood of cost pass-through to consumers for goods and services
- Margin pressure and competitiveness risks versus regions with slower energy price growth
- Potential slowdowns in hiring, deferred capital investment, and impacts on small and mid-sized enterprises
- Uneven effects across rural and urban communities, with municipal and cooperative utilities also exposed to wholesale market dynamics
Household Bill Impacts
As supporting context, Energy Innovation projects typical household electric bills rising by about $640 annually by 2035.
Understanding the Underlying Drivers
Several interconnected factors are driving these dramatic cost increases beyond the immediate policy changes.
Loss of Low-Cost Renewable Generation
Renewable energy sources, particularly wind and solar, have historically provided some of the lowest-cost electricity generation once facilities are constructed. The removal of federal tax incentives reduces the economic viability of new renewable projects, forcing utilities to maintain or expand more expensive fossil fuel generation.
This shift is particularly impactful in Missouri, where wind resources in the northern and western portions of the state have provided increasingly cost-effective power generation. Without supportive federal policies, fewer of these low-cost resources will be developed, leaving utilities dependent on higher-cost alternatives.
Aging Infrastructure Replacement
Missouri's electrical infrastructure, like that in many states, includes generation facilities and transmission lines built decades ago that are reaching the end of their useful lives. Replacing aging coal plants, upgrading transmission systems, and modernizing grid infrastructure requires substantial capital investments that utilities recover through customer rates.
The combination of necessary infrastructure replacement and policy changes favoring fossil fuel development creates a scenario where utilities are investing in expensive new generation capacity while losing access to lower-cost alternatives.
Data Center and AI Demand Growth
The rapid expansion of data centers and artificial intelligence applications is creating unprecedented electricity demand growth across the United States. Missouri, with its central location and relatively lower land costs, is experiencing significant data center development that strains existing grid capacity.
While data centers can provide economic benefits to local communities, they also require utilities to build additional generation capacity to meet their substantial electricity needs. These infrastructure costs are typically spread across all utility customers, potentially shifting some of the expense burden to residential consumers.
Consumer Protections and Limitations
Senate Bill 4 includes several provisions designed to provide consumer protections, though energy policy experts suggest these safeguards have significant limitations.
Public Input Requirements
The legislation maintains requirements for public hearings and regulatory review of major rate increases. Consumers retain the right to participate in rate case proceedings and voice concerns about proposed increases.
Refund Provisions
If utilities collect more money than ultimately approved for construction projects, they must refund excess charges to customers. However, the refund process can take years, and customers bear the opportunity cost of funds collected in the interim.
Regulatory Oversight
The Missouri Public Service Commission continues to oversee utility rate requests and can reject proposals deemed unreasonable. However, the new legal framework expands utilities' ability to justify rate increases, potentially limiting regulators' ability to deny requests.
Despite these protections, most energy policy experts agree that the fundamental structure of the new legislation creates conditions that will drive rates higher regardless of regulatory oversight.
Strategic Responses for Missouri Businesses and Property Owners
Given the likelihood of sustained energy cost increases, Missouri businesses, farms, manufacturers, and property owners can take targeted steps to manage risk and protect margins.
Energy Efficiency for Operations
Focus on high-ROI measures such as process electrification, variable frequency drives, refrigeration upgrades, HVAC optimization, advanced controls, building envelope improvements, and lighting retrofits to reduce load and demand charges.
Onsite Clean Energy and Storage
Evaluate solar, behind-the-meter storage, thermal storage, and demand flexibility to hedge wholesale volatility, lower peak demand, and improve resilience.
Inclusive Financing Solutions
The Missouri Clean Energy District’s Property Assessed Clean Energy (PACE) program—Missouri’s first and largest, with over 300 city and county members—provides accessible financing for energy efficiency and clean energy improvements. Repayment through property assessments can align costs with savings and expand access for organizations that might not qualify for conventional credit.
Missouri Green Banc provides inclusive financing and technical assistance to help businesses, farms, and manufacturers plan, fund, and execute energy efficiency and clean energy projects. Working in partnership with the Missouri Clean Energy District, the organization helps clients use PACE and other capital solutions to mitigate cost spikes, stabilize operating expenses, and strengthen competitiveness.
The Path Forward
The combination of state and federal policy changes creates an environment where Missouri energy costs are likely to continue rising for the foreseeable future. Without mitigation, higher input costs can suppress job growth, reduce economic output, and strain both rural and urban business communities as margins tighten and prices rise for end customers.
Energy efficiency improvements and clean energy investments represent the most effective tools for managing these risks. Well-scoped projects can deliver immediate operating savings, reduce exposure to peak pricing, and provide long-term protection against rate volatility.
Missouri Green Banc partners with public and private stakeholders statewide to expand access to inclusive financing and technical assistance for businesses, farms, manufacturers, and property owners. In collaboration with the Missouri Clean Energy District, these efforts strengthen Missouri’s economic resilience while advancing practical decarbonization and local investment.
Progress is achievable. Organizations that plan ahead and invest in performance improvements today are better positioned to protect jobs, stabilize budgets, and remain competitive as energy prices rise.