SCS/SB 202 - This act establishes provisions relating to electrical corporations.
FINANCING ORDERS (Section 393.1700)
Under the act, an electrical corporation may petition the Public Service Commission for a financing order, which is an order from the Commission that authorizes the issuance of energy transition bonds; the imposition, collection, and periodic adjustments of an energy transition charge; the creation of energy transition property; and the sale, assignment, or transfer of energy transition property to an assignee. An energy transition charge shall be used to repay, finance, or refinance energy transition costs and financing costs that are charges imposed on and part of all retail customer bills.
The time frame for proceedings on a petition for a financing order are set forth in the act. An adversely affected party may seek judicial relief as set forth in law for Commission decisions.
A financing order issued by the Commission shall include elements as set forth in the act.
A financing order issued to an electrical corporation may provide that the creation of the electrical corporation's energy transition property is conditioned upon, and simultaneous with, the sale or other transfer of the energy transition property to an assignee and the pledge of the energy transition property to secure energy transition bonds.
If a financing order is issued, the electrical corporation shall file a petition or letter at least annually applying the formula-based true-up mechanism requesting administrative approval to make applicable adjustments. The Commission has 30 days from receiving the petition or letter to approve the request or inform the electrical corporation of any mathematical or clerical errors in its calculation.
Once energy transition bonds are authorized the Commission may not amend, modify, or terminate the financing order by any subsequent action or make changes to energy transition charges approved in the financing order.
A financing order remains in effect, and energy transition property under the financing order continues to exist, until energy transition bonds issued pursuant to the financing order have been paid in full or defeased and, in each case, all Commission-approved financing costs of such energy transition bonds have been covered in full.
The energy transition bonds issued pursuant to a financing order shall not be considered to be debt of the electrical corporation other than for federal and state income taxes.
No electrical corporation is required to file a petition for a financing order. A decision not to file for a financing order shall not be admissible in any Commission proceeding or otherwise utilized or relied on by the Commission in certain proceedings.
Debt reflected by the energy transition bonds shall not be utilized or considered in establishing the electrical corporation's capital structure used to determine any regulatory matter.
The Commission may not, directly or indirectly, consider the existence of energy transition bonds or the potential use of energy transition bond financing proceeds in determining the electrical corporation's authorized rate of return used to determine the electrical corporation's revenue requirement used to set rates.
Electric bills of an electrical corporation that has obtained a financing order and caused transition bonds to be issued shall include specific information set forth in the act.
Energy transition property specified in a financing order exists until energy transition bonds issued pursuant to the financing order are paid in full and all financing costs and other costs of such energy transition bonds have been recovered in full.
If an electrical corporation defaults on any required remittance of energy transition charges arising from energy transition property specified in a financing order, a court, upon application by an interested party, shall order the sequestration and payment of the revenues arising from the energy transition property to the financing parties or their assignees.
Any successor to an electrical corporation shall perform and satisfy all obligations of, and have the same rights under a financing order as, the electrical corporation under the financing order.
The act contains several provisions related to security interests in energy transition property.
A security interest in energy transition property is created, valid, and binding and perfected at the later of the time:
• The financing order is issued;
• A security agreement is executed and delivered by the debtor granting such security interest;
• The debtor has rights in such energy transition property or the power to transfer rights in such energy transition property; or
• Value is received for the energy transition property.
The law governing the validity, enforceability, attachment, perfection, priority, and exercise of remedies with respect to the transfer of an interest or right or the pledge or creation of a security interest in any energy transition property shall be the laws of Missouri.
The act lists entities that may legally invest any sinking funds, moneys, or other funds in energy transition bonds.
REPLACEMENT RESOURCES (Section 393.1705)
An electrical corporation may file a petition concurrently with a petition filed for a financing order for investment in replacement resources, as such term is defined in the act, and the Commission shall approve such investment in an amount set forth in the act. Such approval shall constitute an affirmative and binding determination by the Commission, to be applied in all subsequent proceedings respecting the rates of the electrical corporation, that such investment is prudent and reasonable, that the replacement resource is necessary for the electrical corporation's provision of electric service to its customers, and that such investment shall be reflected in the revenue requirement used to set the electrical corporation's base rates.
The approval is subject only to the Commission's authority to determine that the electrical corporation did not manage or execute the project in a reasonable and prudent manner in some respect and the Commission's authority to disallow for ratemaking purposes only that portion of the investment that would not have been incurred had the unreasonable or imprudent management or execution of the project not occurred.
The changes in the electrical corporation's revenue requirement that shall be deferred to a regulatory asset or liability shall only consist of items listed in the act.
The time frame for proceedings on a petition to have investment in replacement resources approved is set forth in the act.
PURCHASED POWER AGREEMENTS (Section 393.1710)
This section applies to purchased power agreements with a term commencing on or after August 28, 2021, that an electrical corporation entered into for the purchase of certain generation facilities or energy storage facilities as listed in the act. If the term of one or more purchased power agreements have commenced prior to the rate base cutoff date in one of the electrical corporation's general rate cases, the Commission shall, without limiting recoveries outside the context of a general rate case as contemplated by rate adjustment mechanisms approved under law, include certain items set forth in the act in the revenue requirement used to set base rates in that general rate case.
RATEMAKING PRINCIPLES AND TREATMENT (Section 393.1715)
An electrical corporation may petition the Commission for a determination of the ratemaking principles and treatment, as proposed by the corporation, that will apply to the reflection in base rates of the electrical corporation's capital and noncapital costs associated with one or more of the corporation's coal-fired facilities.
If the Commission fails to issue a determination within 135 days that a petition for a determination of ratemaking principles and treatment is filed, the ratemaking principles and treatment proposed by the petitioning electrical corporation shall be deemed to have been approved by the Commission.
The factors and circumstances to which such principles and treatment apply are listed in the act. If the electrical corporation determines that one or more major factor or circumstance has changed in a manner that warrants a change in the approved ratemaking principles and treatment, then it shall file a notice in the docket within 45 days of such determination.
A party that has concerns about the proposed changes in principles and treatment shall file a notice of its concerns within 30 days of the electrical corporation's filing. If a party believes that one or more factor or circumstance warrants a change in the approved principles and treatment and the electrical corporation does not agree, such party shall file a notice within 45 days, and such notice shall include information as listed in the act.
UNIFORM COMMERCIAL CODE (Section 400.9-109)
Article 9 of the Uniform Commercial Code relating to secured transactions shall not apply to the creation, perfection, priority, or enforcement of any sale, assignment of, pledge of, security interest in, or other transfer of, any interest or right or portion of any interest or right in any energy transition property.