HCS HB 654 -- UTILITIES

SPONSOR:  Emery (Schoeller)

COMMITTEE ACTION:  Voted "do pass" by the Committee on Utilities
by a vote of 10 to 2.

This substitute establishes the Missouri Residential and Small
Business Energy Efficiency Investment Act and changes the laws
regarding utility company rate adjustments.

MISSOURI RESIDENTIAL AND SMALL BUSINESS ENERGY EFFICIENCY
INVESTMENT ACT

The Missouri Residential and Small Business Energy Efficiency
Investment Act is established which requires the Missouri Public
Service Commission to allow electric and gas corporations to
implement and recover costs related to commission-approved energy
efficiency programs aimed at customers.  In its main provisions,
the substitute:

(1)  Requires the commission to develop cost recovery methods
that value energy efficiency investments equal to or better than
traditional supply-side investments by the company;

(2)  Requires any cost recovery method to take into account lost
energy sales associated with energy efficiency;

(3)  Allows the commission to reduce or exempt energy efficiency
costs for low-income customers and caps the amount that a
customer of any rate class must pay at $5,000 per month;

(4)  Requires the commission to provide oversight, allows it to
adopt rules and procedures, and allows it to approve certain
settlements and tariff provisions to ensure that electric and gas
corporations achieve the goals of the substitute; and

(5)  Specifies annual reporting requirements for electric and gas
companies on energy efficiency activities.

UTILITY COMPANY RATE ADJUSTMENTS

Currently, rate adjustments in the purchase price of natural gas
which have been approved by the Missouri Public Service
Commission are exempt from certain provisions regarding business
license taxation.  The substitute allows any adjustments to
include the gas cost portion of net write-offs incurred by a gas
corporation in providing service to its customers.  Any write-off
may only be recovered once through the gas corporation's
purchased gas adjustment rates.  A true-up of the gas cost
portion of net write-offs is required once every year, and the
commission must annually review a gas corporation's records to
ensure that it is prudently pursuing the moneys owed by its
customers.

The substitute increases from three to five years the period of
time that a gas corporation is able to collect an infrastructure
system replacement surcharge without holding a general rate
proceeding before the commission.

An electric corporation is allowed to file a petition and
proposed rate schedule with the Missouri Public Service
Commission to establish or change infrastructure system
replacement surcharges (ISRS) rate schedules that will allow for
the adjustment of the corporation's rates and charges for the
recovery of costs for eligible infrastructure system
replacements.  The commission cannot approve an ISRS if it would
produce total annualized ISRS revenues below the lesser of $1
million or 0.5% of the corporation's base revenue level approved
by the commission in the corporation's most recent general rate
proceeding or if it would produce total annualized ISRS revenues
exceeding 10% of the corporation's base revenue level approved at
the most recent general rate proceeding.  The period of
collection on an ISRS is limited to five years, but may be
extended if the corporation has filed for or is the subject of a
new general rate proceeding.

The substitute specifies the procedures for the application and
hearing as well as the accounting methods and procedures to be
used for the surcharges.

FISCAL NOTE:  Estimated Cost on General Revenue Fund of $126,715
in FY 2010, $153,531 in FY 2011, and $158,139 in FY 2012.  No
impact on Other State Funds in FY 2010, FY 2011, and FY 2012.

PROPONENTS:  Supporters say that the bill will allow invoices and
prices to more accurately reflect the cost of gas at the time it
is incurred by a company and a company to more quickly adjust
rates depending on the market price of a product that has had
great deviation in prices in the past.  This could often benefit
customers when gas prices decrease as the company will be able to
adjust rates downward quickly and not be unjustly enriched.

Testifying for the bill were Representative Schoeller; Missouri
Energy Development Association; Ameren UE; Atmos Energy
Corporation; Laclede Gas Company; John Rich, Mid-America
Assistance Coalition; and Empire District Electric Company.

OPPONENTS:  Those who oppose the bill say that it will constitute
single-issue ratemaking which is not the normal ratemaking
process and provides consumers less protection.  The bill
unjustly shifts the burden for bad debt collection from companies
to customers.

Testifying against the bill were Consumers Council of Missouri;
AARP; and Office of Public Counsel.

Missouri House of Representatives
95th General Assembly, 1st Regular Session
Last Updated November 17, 2009 at 9:25 am