HB 2343 -- ELECTRICAL CORPORATION CONSTRUCTION

SPONSOR:  Emery

COMMITTEE ACTION:  Voted "do pass" by the Committee on Utilities
by a vote of 9 to 2.

Currently, an electrical corporation is prohibited from making or
demanding charges for service that are based on the costs of
construction in progress on any existing or new facility of the
electric corporation or any other costs associated with owning,
operating, maintaining, or financing the property before it is
fully operational and used for service.  This bill removes the
prohibition for baseload generating plants and generating
facilities and authorizes the Missouri Public Service Commission
to make or demand additional charges for service based on
additional amortizations to maintain the electrical corporation's
financial ratios, if in the commission's judgment, it would
better enable the corporation to cost-effectively construct or
implement a generating plant, environmental upgrades, smart grid
infrastructure, high and low voltage delivery infrastructure,
energy facilities, or energy efficient programs.

The bill establishes the Missouri Energy Security Construction
Act which requires the commission, for rate-making purposes and
for obtaining required regulatory approvals, to treat all capital
costs and expenses incurred by the subsidiary corporation,
limited liability company, partnership, or other entity that an
electrical corporation forms to acquire, finance, license,
construct, own, operate, maintain, or decommission a baseload
generating plant, as if the costs, expenses, and revenues were
incurred or received directly by the electrical corporation and
the plant itself was owned directly by the electrical
corporation.  The property of an electrical corporation owning a
baseload generating plant must be treated as if it were owned by
the electrical corporation for all purposes of the assessment and
levy of property taxes.

The commission must convene a docket within 30 days of the
effective date of the bill to consider the relative merits of
various methods to finance baseload generating plants and
generating facilities.

Procedural requirements are specified for an electrical
corporation filing a project development application and a
facility review order as well as requirements and procedures for
when the commission considers the applications and orders
regarding construction work in progress for both rate-making and
regulatory approval purposes.  No earlier than three months after
the issuance of a facility review order which, if requested by
the electrical corporation, must include an order approving
revised rates and every three months thereafter the electrical
corporation may file with the commission requests for the
approval of revised rates that must include the electrical
corporation's additional investment in the facility as shown in
its accounting records that were not previously included in the
rates.

The bill specifies that courts of the state will have the power
to review commission determinations but cannot stop or delay the
construction, operation, or maintenance of a baseload generating
plant or generating facility, except to require compliance with
any unmet requirement or prohibit cost recoveries previously
approved in commission proceedings.

Any state or regional agency, political subdivision, or other
local government, with the exception of the Department of Natural
Resources, is prohibited from requiring approval, consent,
permit, certificate, or other condition for construction,
operation, or maintenance of a baseload generating plant or other
generating facility authorized by the commission with the
exception of the application of state laws for the protection of
employees engaged in the construction, operation, or maintenance
of a facility.  State agencies will continue to have authority to
enforce compliance with applicable state statutes, rules,
regulations, or standards within their authority.

FISCAL NOTE:  No impact on state funds in FY 2011, FY 2012, and
FY 2013.

PROPONENTS:  Supporters say that the bill is necessary to ensure
that Missouri utilities can finance and construct power plants
which will meet growing energy demands.  The bill will minimize
the costs of construction and financing in a variety of ways.
Missouri utilities currently paying high-interest rates must
issue high-yield bonds because of their low credit ratings.

Testifying for the bill were Representative Emery; Missouri
Energy Development Association; Association of Missouri
Electrical Cooperatives; Missouri Association of Municipal
Utilities; and Missourians for a Balanced Energy Future.

OPPONENTS:  Those who oppose the bill say it will repeal a
voter-enacted ban on including construction costs in utility
rates prior to a power plant becoming operational.  Utilities
have a state-enforced monopoly and are allowed to generate a 10%
or greater rate of return.  Utilities should assume greater risks
for new projects.

Testifying against the bill were Office of the Public Counsel;
Missouri Industrial Energy Consumers; Missouri Energy Group;
Consumers Council of Missouri; AARP; Missouri Association for
Social Welfare; and P. J. Wilson, Renew Missouri.

Missouri House of Representatives
95th General Assembly, 2nd Regular Session
Last Updated September 14, 2010 at 3:13 pm