Bill Text: MO HB398 | 2013 | Regular Session | Comm Sub
Bill Title: Allows an electrical corporation to file a petition with the Missouri Public Service Commission to recover specified infrastructure replacement costs
Spectrum: Partisan Bill (Republican 2-0)
Status: (Introduced - Dead) 2013-04-04 - Rules - Reported Do Pass (H) [HB398 Detail]
Download: Missouri-2013-HB398-Comm_Sub.html
FIRST REGULAR SESSION
HOUSE COMMITTEE SUBSTITUTE FOR
97TH GENERAL ASSEMBLY
1123H.03C D. ADAM CRUMBLISS, Chief Clerk
AN ACT
To amend chapter 393, RSMo, by adding thereto four new sections relating to ratemaking for public utilities.
Be it enacted by the General Assembly of the state of Missouri, as follows:
Section A. Chapter 393, RSMo, is amended by adding thereto four new sections, to be known as sections 393.1200, 393.1205, 393.1210, and 393.1215, to read as follows:
393.1200. As used in sections 393.1200 to 393.1215, the following terms mean:
(1) "Appropriate pretax revenues", the revenues necessary to produce net operating income equal to:
(a) The electrical corporation's weighted cost of capital multiplied by the net original cost of eligible infrastructure system replacements and additions less associated plant-related accumulated deferred income taxes in compliance with normalization requirements of federal tax law;
(b) State, federal, and local income or excise taxes applicable to such income; and
(c) All other ISRS costs;
(2) "Commission", the Missouri public service commission;
(3) "Electric corporation", shall have the same meaning as in subdivision (15) of section 386.020;
(4) "Electric utility plant projects", means:
(a) Electric plant, as defined in subdivision (14) of section 386.020, excluding newly constructed or newly acquired electric generating plants and administrative office buildings and their furnishings;
(b) If not being recovered in a rate schedule authorized by subsection 2 of section 386.266, the costs of capital projects undertaken to comply with federal, state, or local environmental or safety statutes, ordinances, or regulations; and
(c) The costs of facilities relocations required due to construction or improvement of a highway, road, street, public way, or other public work by or on behalf of the United States, this state, a political subdivision of this state, or another entity having the power of eminent domain provided that the costs related to such projects have not been reimbursed to the electrical corporation;
(5) "Eligible infrastructure system replacements and additions", electric utility plant projects that:
(a) Do not increase revenues by directly connecting the infrastructure replacement or addition to new customers;
(b) Are in service and used and useful;
(c) Were not included in the electrical corporation's rate base in its most recently concluded general rate case; and
(d) Replace or extend the useful life of existing infrastructure or are for additional infrastructure;
(6) "ISRS", infrastructure system replacement surcharge;
(7) "ISRS costs", depreciation expense for all eligible infrastructure system replacements and additions that are placed in service and became used and useful since the date through which rate base additions were accounted for in developing the revenue requirement in the electrical corporation's most recently concluded general rate case or its last ISRS filing, offset by retirements and depreciation expenses accrued since the effective date of rates in the electrical corporation's most recently concluded general rate proceeding or its last ISRS filing on the plant included in the rate base in that general rate proceeding or included in that ISRS filing, and the return on said eligible infrastructure system replacements and additions at the electrical corporation's weighted cost of capital used to determine the appropriate pretax revenues, with both the depreciation and return to be deferred on the electrical corporation's books between the time the eligible infrastructure system replacements and additions were placed in service and the effective date of an ISRS rate schedule reflecting the deferred depreciation and return;
(8) "ISRS revenues", revenues produced through an ISRS exclusive of revenues from all other rates and charges;
(9) "Net original cost of eligible infrastructure system replacements and additions", the original cost of the eligible infrastructure replacements and additions net of accumulated depreciation on the eligible infrastructure replacements and additions, offset by (i) depreciation expense accrued on the plant included in the rate base in the electrical corporation's most recently concluded general rate proceeding since the effective date of rates developed in that proceeding, and (ii) the original cost of plant retirements and accrued depreciation expenses associated with such retirements for retirements recorded after the date through which the rate base additions were accounted for in developing the commission-approved revenue requirement in that general rate proceeding.
393.1205. 1. Notwithstanding any provisions of chapter 386 or this chapter to the contrary, beginning August 28, 2013, an electrical corporation providing electric service may file a petition and proposed rate schedules with the commission to establish or change ISRS rate schedules that will allow for the adjustment of the electrical corporation's rates and charges to provide for the recovery of costs for eligible infrastructure system replacements and additions. The commission may not approve an ISRS to the extent it would produce total annualized ISRS revenues below the lesser of one million dollars or one-half of one percent of the electrical corporation's base revenue level approved by the commission in the electrical corporation's most recent general rate proceeding. The commission may not approve an ISRS to the extent it would produce total annualized ISRS revenues exceeding eight percent of the electrical corporation's base revenue level approved by the commission in the electrical corporation's most recent general rate proceeding. An ISRS and any future changes thereto shall be calculated and implemented in accordance with the provisions of sections 393.1200 to 393.1215. ISRS revenues shall be subject to a refund based upon a finding and order of the commission to the extent provided in subsections 5 and 8 of section 393.1210.
2. The commission shall not approve an ISRS for any electrical corporation that has not had a general rate proceeding decided or dismissed by issuance of a commission order within the past three years, unless the electrical corporation has filed for or is the subject of a new general rate proceeding.
3. In no event shall an electrical corporation collect an ISRS for a period exceeding three years unless the electrical corporation has filed for or is the subject of a new general rate proceeding; provided that the ISRS may be collected until the effective date of new rate schedules established as a result of the new general rate proceeding, or until the subject general rate proceeding is otherwise decided or dismissed by issuance of a commission order without new rates being established. An electrical corporation shall be permitted to establish or change ISRS rate schedules during the pendency of a general rate proceeding so long as the establishment or change in the ISRS rate schedules takes effect on or before the date through which rate base additions were accounted for in developing the commission-approved revenue requirement in that general rate proceeding.
393.1210. 1. (1) No later than forty-five days prior to filing a petition with the commission to establish or change an ISRS, an electrical corporation shall submit to the commission a preliminary list of projects costing in excess of five million dollars which are to be included in the ISRS filing. The list shall include a detailed description of each such project and each such project’s cost. At the time that an electrical corporation files a petition with the commission seeking to establish or change an ISRS, it shall submit proposed ISRS rate schedules and its supporting documentation regarding the calculation of the proposed ISRS with the petition, and shall serve the office of the public counsel with a copy of its petition, its proposed rate schedules, and its supporting documentation.
(2) Upon the filing of a petition, and any associated rate schedules, seeking to establish or change an ISRS, the commission shall publish notice of the filing.
2. (1) When a petition, along with any associated proposed rate schedules, is filed pursuant to the provisions of sections 393.1200 to 393.1215, the commission shall conduct an examination of the proposed ISRS.
(2) The staff of the commission may examine information of the electrical corporation to confirm that the underlying costs are in accordance with the provisions of sections 393.1200 to 393.1215, and to confirm proper calculation of the proposed charge, and may submit a report regarding its examination to the commission not later than ninety days after the petition is filed. No other revenue requirement or ratemaking issues may be examined in consideration of the petition or associated proposed rate schedules filed pursuant to the provisions of sections 393.1200 to 393.1215.
(3) The commission may hold a hearing on the petition and any associated rate schedules and shall issue an order to become effective not later than one hundred fifty days after the petition is filed.
(4) If the commission finds that a petition complies with the requirements of sections 393.1200 to 393.1215, the commission shall enter an order authorizing the corporation to impose an ISRS that is sufficient to recover appropriate pretax revenue, as determined by the commission pursuant to the provisions of sections 393.1200 to 393.1215.
3. An electrical corporation may effectuate a change in its rate pursuant to the provisions of this section no more often than two times every twelve months.
4. In determining the appropriate pretax revenue, the commission shall consider only the following factors:
(1) The current state, federal, and local income tax or excise rates;
(2) The electrical corporation's actual regulatory capital structure as determined during the most recent general rate proceeding of the electrical corporation;
(3) The actual cost rates for the electrical corporation's debt and preferred stock as determined during the most recent general rate proceeding of the electrical corporation;
(4) The electrical corporation's cost of common equity as determined during the most recent general rate proceeding of the electrical corporation;
(5) The current property tax rate or rates applicable to the eligible infrastructure system replacements and additions;
(6) The current depreciation rates applicable to the eligible infrastructure system replacements and additions; and
(7) In the event information pursuant to subdivisions (2), (3), and (4) of this subsection is unavailable and the commission is not provided with such information on an agreed-upon basis, the commission shall refer to the testimony submitted during the most recent general rate proceeding of the electrical corporation and use, in lieu of any such unavailable information, the recommended capital structure, recommended cost rates for debt and preferred stock, and recommended cost of common equity that would produce the average weighted cost of capital based upon the various recommendations contained in such testimony.
5. (1) The monthly ISRS charge may be calculated based on a reasonable estimate of billing units in the period in which the charge will be in effect, which shall be conclusively established by dividing the appropriate pretax revenues by the customer numbers reported by the electrical corporation in the annual report it most recently filed with the commission pursuant to subdivision (6) of section 393.140, and then further dividing this quotient by twelve. Provided, however, that the monthly ISRS may vary according to customer class and may be calculated based on customer numbers as determined during the most recent general rate proceeding of the electrical corporation so long as the monthly ISRS for each customer class maintains a proportional relationship equivalent to the proportional relationship of the monthly customer charge for each customer class. In any event, the ISRS for any customer that has a demand level that exceeds four hundred megawatts shall be set using an allocation of appropriate pretax revenue based on the proportional relationship of the customer charge paid by that customer to the total charges paid by all customers.
(2) At the end of each twelve-month calendar period the ISRS is in effect, the electrical corporation shall reconcile the differences between the revenues resulting from an ISRS and the appropriate pretax revenues as found by the commission for that period and shall submit the reconciliation and a proposed ISRS adjustment to the commission for approval to recover or refund the difference, as appropriate, through adjustments of an ISRS charge.
6. (1) An electrical corporation that has implemented an ISRS pursuant to the provisions of sections 393.1200 to 393.1215 shall file revised rate schedules to reset the ISRS to zero when new base rates and charges become effective for the electrical corporation following a commission order establishing customer rates in a general rate proceeding that incorporates in the utility's base rates subject to subsections 8 and 9 of this section eligible costs previously reflected in an ISRS.
(2) Upon the inclusion in an electrical corporation's base rates subject to subsections 8 and 9 of this section of eligible costs previously reflected in an ISRS, the electrical corporation shall immediately thereafter reconcile any previously unreconciled ISRS revenues as necessary to ensure that revenues resulting from the ISRS match as closely as possible the appropriate pretax revenues as found by the commission for that period.
7. An electrical corporation's filing of a petition or change to an ISRS pursuant to the provisions of sections 393.1200 to 393.1215 shall not be considered a request for a general increase in the electrical corporation's base rates and charges.
8. Commission approval of a petition, and any associated rate schedules, to establish or change an ISRS pursuant to the provisions of sections 393.1200 to 393.1215 shall in no way be binding upon the commission in determining the ratemaking treatment to be applied to eligible infrastructure system replacements and additions during a subsequent general rate proceeding when the commission may undertake to review the prudence of such costs. In the event the commission disallows, during a subsequent general rate proceeding, recovery of costs associated with eligible infrastructure system replacements and additions previously included in an ISRS, the electrical corporation shall credit the bills of its customers as of the time the credit is being given for the disallowed amount, plus interest at the electrical corporation’s weighted cost of capital from its last general rate proceeding, over a period of no longer than six months. Credits shall be allocated to each rate class in proportion to the ISRS charges applicable to that rate class during the period when the over-collections occurred. Each customer in a given rate class shall receive the same credit, and each credit shall be shown as a separate line item on customers’ bills.
9. Nothing in this section shall be construed as limiting the authority of the commission to review and consider infrastructure system replacement and addition costs along with other costs during any general rate proceeding of any electrical corporation.
10. Nothing contained in sections 393.1200 to 393.1215 shall be construed to impair in any way the authority of the commission to review the reasonableness of the rates or charges of an electrical corporation, including review of the prudence of eligible infrastructure system replacements and additions made by an electrical corporation, pursuant to the provisions of section 386.390.
11. The commission shall have the authority to promulgate rules for the implementation of this section, but only to the extent such rules are consistent with, and do not delay the implementation of, the provisions of this section. Any rule or portion of a rule, as that term is defined in section 536.010 that is created under the authority delegated in this section shall become effective only if it complies with and is subject to all of the provisions of chapter 536, and, if applicable, section 536.028. This section and chapter 536 are nonseverable and if any of the powers vested with the general assembly pursuant to chapter 536 to review, to delay the effective date, or to disapprove and annul a rule are subsequently held unconstitutional, then the grant of rulemaking authority and any rule proposed or adopted after August 28, 2013, shall be invalid and void.
393.1215. 1. Notwithstanding any provision of chapter 386 or this chapter to the contrary, any electrical corporation that has had a general rate proceeding decided or dismissed by issuance of a commission order within the past three years shall, commencing with the first day of the month following the month in which this section becomes effective, implement a mechanism to track the differences between the following:
(1) The noncapitalized costs used to set the revenue requirement in that rate case for the electrical corporation's or its affiliate's labor, training, benefits, including but not limited to workers' compensation insurance, payroll taxes, transmission charges or expenses, property taxes, property insurance, and for external contractors contracted by the electrical corporation for the operation or maintenance of the electrical corporation's transmission, distribution, or generation systems; and
(2) The sum of those costs that are actually incurred by, or allocated to, the electrical corporation as reflected on its books and records in subsequent periods.
2. The electrical corporation shall defer any amounts tracked under subsection 1 of this section on its books and records as a regulatory asset or regulatory liability. In its next general rate proceeding, the regulatory asset or regulatory liability will be included in the determination of the electrical corporation's revenue requirement through an amortization over a period of three years, without any offset, reduction, or adjustment based upon consideration of any other factor or otherwise, except for a review of the prudence of the costs included in any regulatory asset as part of the general rate proceeding unless the amount of the annual amortization as of the time the amortization is to occur exceeds two percent of the electrical corporation’s base revenue level as determined by the commission in the electrical corporation’s prior general rate proceeding, in which event the annual amortization will be reduced so that it equals the two percent limitation. Notwithstanding the foregoing, the following costs shall not be included in the electrical corporation's or its affiliate's labor or benefits components of the foregoing calculation:
(1) Any costs in a separate, deferred accounting mechanism, tracker, or rate adjustment mechanism;
(2) Labor costs for the electrical corporation's or the electrical corporation parent company's officers;
(3) That portion of the electrical corporation's labor costs that consist of incentive compensation that is dependent on the electrical corporation's or the electrical corporation's parent company's earnings; and
(4) Administrative and general labor costs recorded in Account 920 of the Uniform System of Accounts, or any successor account, applicable to electrical corporations.
3. In subsequent general rate proceedings occurring after a general rate proceeding where an amortization through rates of a regulatory asset or regulatory liability began, any unamortized balance shall be included in the electrical corporation's revenue requirement through a reamortization of said balance over a period of three years, also without any offset, reduction, or adjustment based upon consideration of any other factor or otherwise. The sums to be reamortized under this subsection shall not count toward the two percent limitation under subsection 2 of this section.
4. The commission shall have the authority to promulgate rules for the implementation of this section, but only to the extent such rules are consistent with, and do not delay the implementation of, the provisions of this section. Any rule or portion of a rule, as that term is defined in section 536.010 that is created under the authority delegated in this section shall become effective only if it complies with and is subject to all of the provisions of chapter 536, and, if applicable, section 36.028. This section and chapter 536 are nonseverable and if any of the powers vested with the general assembly pursuant to chapter 536 to review, to delay the effective date, or to disapprove and annul a rule are subsequently held unconstitutional, then the grant of rulemaking authority and any rule proposed or adopted after August 28, 2013, shall be invalid and void.
5. Section 393.1215 shall terminate and be of no further force and effect after August 27, 2025, unless that section shall be reenacted by the general assembly.
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