Missouri State Senate

Senate Committee Substitute

SCS/SB 228 - The act creates the Missouri Clean and Renewable Energy Construction Act.

The act modifies the construction work in progress (CWIP) law to allow costs associated with the planning and construction of certain types of power plants to be recoverable by an electric company through its customer rates prior to plant start-up. Eligible power plants include plants that generate electricity from renewable sources and plants that meet certain large capacity criteria that are also intended to reduce carbon emissions.

Subsidiary corporations created by an electric company for the purpose of building or operating an eligible power plant shall be considered and treated as the electric company under the act.

No later than 30 days after August 28, 2009, the Public Service Commission (PSC) shall begin an evaluation of the relative merits of various financing methods that an electric company may use to build new power plants and shall issue a report of its findings to the Governor and General Assembly by August 28, 2010.

Electric companies may apply to the PSC for a project development order, which is an order issued by the PSC establishing the prudence of an electric company's decision to incur preconstruction costs for an eligible power plant. The PSC may approve certain prudent preconstruction costs in rates charged by the company. The PSC shall respond to an application for a project development order or amended project development order within one year of the application's date of filing. If the electric company decides not to build the power plant after a project development order has been issued, the associated preconstruction costs are still recoverable through customer rates, provided that the decision to abandon the project is reasonable and that the costs to ratepayers would be less than if the company completed the project.

The act requires an electric company to seek approval from the PSC to sell, transfer, or encumber any interest it has in an eligible power plant. If such interest involves a license issued by the U.S. Nuclear Regulatory Commission and any of the costs to acquire the license were recovered from ratepayers, then the PSC shall prescribe how any proceeds arising from the transfer of interest shall be refunded to ratepayers.

Once an electric company has received any and all necessary licenses and permits for an eligible power plant, the company may apply to the PSC for a facility review order, which is an order issued by the PSC that establishes the prudency of the anticipated construction costs to build the plant. The act requires the PSC to develop the requirements for a facility review order application by September 1, 2010. The PSC must respond to a facility review order application no later than 11 months after its date of filing. Under a facility review order, the PSC may require quarterly expedited rate revisions or the company may request expedited rate revisions. An electric company may petition the PSC to modify a facility review order.

Provided that the electric company adheres to the construction schedule and costs listed in the facility review order, the facility review order is a binding determination of the prudency of the company's capital costs associated with construction. Such capital costs may be recovered in rates through expedited revised rate reviews or through general rate proceedings. The PSC can disallow any capital cost that it determines to have been imprudently incurred. Cost deviations caused by forces or factors beyond the company's control shall not be considered imprudence on the part of the company.

The act provides that if the Clean and Renewable Energy Construction Act is modified in the future in such a way as to limit or prohibit construction costs to be recovered through rates, any costs incurred by an electric company up to that point shall still be recoverable, even in the event that the plant is not constructed.

The act allows the PSC to require electric companies that have been issued a facility review order to file periodic reports. The PSC shall monitor the construction of and expenditure of capital associated with building a power plant under a facility review order.

The act provides procedures for an electric company to request to revise its rates in an expedited manner as it incurs additional construction costs. The PSC shall respond to an expedited rate request within 6 months of its filing. The PSC staff shall audit any revised rates for compliance with the facility review order. If the PSC finds that any previously approved rates resulted in an excess of revenue above the amount approved in the facility review order, the electric company shall credit its customers' bills over the subsequent 4 monthly billing cycles.

Electric companies shall promptly notify their customers of any increase in rates approved by the PSC in a revised rate order.

If construction of the power plant gets cancelled, the associated construction costs may still be recovered through rates, provided that the decision to cancel the construction is reasonable and the company demonstrates that the cost to ratepayers would be less than the cost of completing the project.

Once a power plant under a facility review order is constructed, the PSC shall audit the company's finances in relation to the project and its cost recovery for purposes of determining compliance with the facility review order. Any over- or under-recovery of costs shall be credited or charged, respectively, to the customers.

Procedures for re-hearing a PSC order are provided in the act. Procedural requirements for general PSC rate proceedings shall apply to rate proceedings under the act, however, form and content requirements shall only apply to proceedings that are combined with a general rate proceeding.

The act limits courts from reviewing any matter over which the act expressly gives the PSC jurisdiction except as provided under current law for appealing a re-hearing request or decision. Except for permits required by the Department of Natural Resources, the act restricts any state, regional, or local government from requiring any additional approval for the construction of an eligible power plant under the act.

If an electric company subsequently sells a license acquired for an eligible power plant or sells the eligible power plant itself after having recovered costs from ratepayers under the act, the PSC shall require the company to refund the ratepayers.

This act is similar to HB 554 (2009).

ERIKA JAQUES

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