SB 1132 Establishes predetermination of prudence for utility infrastructure investments
Sponsor:Steelman Co-Sponsor(s)
LR Number:3582S.08C Fiscal Note:3582-08
Committee:Commerce and Environment
Last Action:05/14/04 - S Inf Calendar S Bills for Perfection Journal page:
Title:SCS SB 1132
Effective Date:August 28, 2004
Full Bill Text | All Actions | Available Summaries | Senate Home Page | List of 2004 Senate Bills
Current Bill Summary

SCS/SB 1132 - Legislation pertaining to predetermination of prudence for infrastructure investments by utilities.

SECTION 386.376 - This act allows the commission to approve programs that would assist low-income residential ratepayers as well as energy efficiency, weatherization, and evaluation components as part of such programs.

Changes made to this section included removing language that would enable only utility companies to offer those programs; as it stands, that option is open to anyone - utility, Public Service Commission (PSC), or consumer. The second change involved removing language that would enable utility companies to include terms for adjusting rates in their proposal to the PSC to ensure no negative financial impact on the company for programs offering assistance.

SECTION 386.390 - This act maintains the twenty-five signature requirement for a rate complaint, however added language clarifies that those signatures shall come from twenty-five residential consumers or five large industrial customers as the term is defined within this section.

This act directs the Commission to decide any overearnings complaints heard within eleven months. A change was made here to remove language that clarified the eleven month time frame from the date all testimony and exhibits are filed with the commission, as it stands, the language directs those complaints to be decided within eleven months period.

This act establishes a refund policy upon a finding that the corporation has overearned - a change from the previous version which qualified that overearning. In cases where the commission has determined that a company has overearned, refunds with interest from the date of the filing of an earnings complaint are due - another change.

SECTION 393.156 - This act allows any electrical corporation proposing to invest more than ten percent of its net utility plant in any new generation plant may file with the PSC an application requesting a predetermination of prudence on the decision to construct. Any and all other projects - contractual, transportation agreements, etc. - can also be submitted to the PSC for such a determination, however it is at the discretion of the PSC whether or not they will consider such proposals - this is a change from the previous draft where the PSC's discretion came in as to whether or not the PSC would make a determination, this language adds to that discretion in that now, the PSC has the option to consider such proposals. The company may also request, as part of the same application, that the PSC determine ratemaking principles that will be applied to the cost of such infrastructure in future proceedings before the commission. The application may include, at the option of the corporation, a request for a certificate of convenience and necessity under Section 393.170 RSMo.

At the time the application is filed, the corporation shall file all evidence supporting its proposed course of action as well as proposed confidentiality agreements and identify all material for a which a need for confidentiality is asserted. If any proposed generation facility is not to be located within the state, the corporation shall also submit evidence that the location of the facility or the contract is in the best interest of Missouri ratepayers.

Under this act, the PSC shall establish guidelines for the submission of the application. The commission shall conduct a hearing and issue an order within one hundred and eighty days after the filing of an application. Under this act, the commission may approve the application as proposed by the corporation, on the basis of conditions required to be accepted by the corporation, or may reject the application. If, after a hearing and consequent order, the PSC determines that the proposed investment is reasonable and prudent, the commission may impose monitoring and reporting conditions on the company responsible. Costs shall be included in the company's rates only in accordance with existing law, except as provided in subsection 6 of the section. Nothing in this act alters the PSC's authority to set the rates or to review the prudence of construction management for the company in question.

The order by the PSC approving, modifying, or rejecting the determination of prudence and addressing ratemaking principles will be applied in any future rate case to the investment and costs of the facility or contract and shall be binding for ratemaking purposes in all future proceedings. Ratemaking principles may include but shall not be limited to, estimated service life, depreciation rate for cost of service purposes, and authorized return on equity.

If the Commission fails to issue an order within one hundred and eighty days, any certificate for convenience and necessity and any ratemaking principles requested by the corporation in the application shall be deemed approved by the Commission and shall be binding for ratemaking purposes in all future proceedings.

Under this act, the corporation shall have two hundred seventy days after the effective date of a prudency order to notify the commission whether it will proceed with the proposed project identified in the application. If the corporation notifies the Commission that it will not proceed with the proposed project, any ratemaking principles included in the order will be of no further force and effect and there shall be no adverse presumption applied to the corporation in any future proceeding before the Commission.

The corporation shall report to the PSC at the times specified in the order or upon the occurrence of any unusual event which may individually, collectively, materially and adversely affect the project for which a certificate has been issued. At the time of such a report, the corporation or the Commission may consider a modification or termination of the project.

In the event that the Commission, after hearing, determines the continuation of the project is no longer prudent or should be modified, the corporation shall be allowed to recover in rates, the amounts already expensed, incurred, or obligated on such project. These costs will be amortized to expenses over a period of years and in a manner to be determined by the commission at the time the application is initially approved or when the order to modify or terminate the project is issued.

No company shall file more than one application covering more than one project in a twelve month period, excluding circumstances when an application has been denied, dismissed, or approved but not entered into - a company can file a new application for the same or an alternative project at any time. Such limitations can be waived by the PSC if the waiver is found to be in the public interest.

Nothing in this act shall excuse a corporation from complying with its public service obligation to provide safe and adequate service at just and reasonable rates.