Missouri Senate

Senate Substitute

COMPETITIVE BIDDING (Section 393.358): Currently, water corporations with more than 1,000 customers are required to use a competitive bidding process for no less than 10% of the corporation's external expenditures for planned infrastructure projects on the water corporation's distribution system. Under this act, such competitive bidding process shall be used for 20% of the corporation's external expenditures for such projects.

WATER AND SEWER INFRASTRUCTURE RATE ADJUSTMENT (Sections 393.1500-393.1509):

The act establishes the Missouri Water and Infrastructure Act, which specifies that a water or sewer corporation that provides water or sewer service to more than 8,000 customer connections may file a petition and proposed rate schedules with the Public Service Commission to create or change a water and sewer infrastructure rate adjustment (WSIRA) that provides for the recovery of pretax revenues associated with eligible infrastructure system projects.

The WSIRA shall not produce revenues in excess of 15% of the water or corporation's base revenue requirement approved by the Commission in the corporation's most recent general rate proceeding, with certain exceptions.

The WSIRA and any future changes shall meet specific requirements set forth in the act.

The Commission shall not approve a WSIRA for a water or sewer corporation that has not had a general rate proceeding decided or dismissed in the 3 years before the filing of a WSIRA petition unless the water or sewer corporation has filed for or is the subject of a new general rate proceeding.

In the event a water or sewer corporation is collecting infrastructure system repalcement surcharge revenues that were approved before August 28, 2021, when a WSIRA is filed, the approved infrastructure system replacement surcharge revenues shall be included in the new WSIRA filing.

At the time the water or sewer corporation files a petition for a WSIRA, it shall submit proposed WSIRA rate schedules and supporting documentation, and the corporation shall also serve the Office of Public Counsel with a copy of the petition, rate schedules, and documentation. Upon the filing of a petition, the Commission shall conduct an examination of the proposed WSIRA, as specified in the act.

The Commission may hold a hearing on the petition and any associated WSIRA rate schedules. If the Commission finds that a petition complies with the requirements set forth in the act, the Commission shall enter an order authorizing the water or sewer corporation to implement the WSIRA. A corporation may petition the Commission for a change in its WSIRA no more than two times in every 12-month period.

The act lists what information the Commission may consider in determining the appropriate pretax revenues and how the WSIRA is calculated. If this information is unavailable and the Commission is not provided such information on an agreed-upon basis, the Commission shall utilize the overall pretax weighted average cost of capital last authorized for the water or sewer corporation in a general rate proceeding regarding a WSIRA or an infrastructure system replacement surcharge. At the end of each 12-month calendar year that a WSIRA is in effect, the corporation shall reconcile the differences between the revenues from a WSIRA and the appropriate pretax revenues found by the Commission for that period and submit the reconciliation and proposed WSIRA to the Commission for approval to recover or credit the difference.

A water or sewer corporation that has a WSIRA shall file revised WSIRA schedules when new base rates and charges become effective following a general rate proceeding that includes the WSIRA eligible costs in the base rates. Once the eligible costs are included in the water or sewer corporation's base rates, the corporation shall reconcile any previously unreconciled WSIRA revenues to ensure that revenues resulting from the WSIRA match as closely as possible the appropriate pretax revenues.

A water or sewer corporation's filing of a petition to establish or change a WSIRA is not considered a request for a general increase in the corporation's base rates and charges.

Commission approval of a petition to establish or change a WSIRA shall in no way be binding upon the Commission in determining the ratemaking treatment to be applied to eligible infrastructure system projects during a subsequent general rate proceeding when the Commission may undertake to review the prudence of such costs. If, during a subsequent general rate proceeding, the Commission disallows recovery of costs associated with eligible infrastructure system projects previously included in a WSIRA, the water or sewer corporation shall offset its WSIRA in the future as necessary to recognize and account for any such overcollections.

Nothing in the act impairs the authority of the Commission to review the reasonableness of the rates or charges of a water or sewer corporation, including review of the prudence of eligible infrastructure system replacements made by a water or sewer corporation.

This act is similar to HB 397 (2021), SB 592 (2020), HCS/HB 2094 (2020), SB 377 (2019), and HCS/HB 633 (2019).

JAMIE ANDREWS