Missouri Senate

Introduced

The act modifies the construction work in progress (CWIP) law to allow financing costs associated with the construction of certain types of "clean energy" and "low carbon-producing" power plants to be recoverable by an electric company through its customer rates prior to plant start-up. Eligible power plants include nuclear facilities, coal-fired power plants that minimize air emissions using carbon sequestration or similar techniques, and power plants that generate energy from renewable sources such as wind, solar, and biomass.

Subsidiary corporations created by an electric company for the purpose of building or operating a nuclear plant or low carbon-emitting coal-fired plant shall be considered and treated as the electric company under the act.

Electric companies may apply to the Public Service Commission (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 a clean energy or low carbon-producing power plant. The act specifies the information required to be in the application and provides deadlines by which the PSC is supposed to respond to an application. All costs associated with preconstruction activities shall be recoverable through customer rates, unless it is demonstrated during a rate proceeding before the PSC that a cost was incurred imprudently by the electric company. If the electric company decides not to build the power plant after a project development order has been issued, the associated costs are still recoverable through customer rates, provided that the decision to not build the power plant is reasonable.

Electric companies 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 a clean energy or low carbon-producing power plant. The act specifies the information required to be in the application, which includes the anticipated construction schedule, capital costs, and revised rate information.

The act lists information to be included in any facility review order issued by the PSC, which includes a construction schedule, components of capital costs including contingencies, return on equity, and various rate-related pieces of information. An electric company may petition the PSC to modify a facility review order. The act provides deadlines by which the PSC is supposed to respond to a facility review order application or to a request to amend a facility review order.

Provided that the electric company adheres to the construction schedule and costs listed in the facility review order, the electric company may recover the construction financing costs through customer rates. The PSC can disallow any construction cost that is shown during a rate hearing to have materially or adversely deviated from the facility review order to the extent that such deviation stems from imprudence on the part of the company. 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 financing costs to be recovered through rates, any costs incurred by an electric company up to that point shall still be recoverable.

Electric companies that have been issued a facility review order must report to the PSC semi-annually until the power plant is in operation. The act lists information required in the report. The PSC shall monitor the construction of and expenditure of capital associated with building the power plant.

The act provides procedures for an electric company to request to revise its rates as it incurs additional construction costs. 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. Similarly, if any previously approved rates resulted in a recovery less than the amounts specified in the facility review order, the difference is recoverable from customers over the next 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 for construction costs.

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.

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.

The act restricts courts from hearing any matter over which the act expressly gives the PSC jurisdiction and restricts any state, regional, or local government from requiring any additional approval for the construction of a clean energy or low carbon-producing power plant beyond what is required in the act.

This act is similar to HB 554 (2009).

ERIKA JAQUES