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EXPLANATION-Matter enclosed in bold-faced brackets [thus] in this bill is not enacted
and is intended to be omitted in the law.
SECOND REGULAR SESSION
SENATE BILL NO. 1716
103RD GENERAL ASSEMBLY
INTRODUCED BY SENATOR MCCREERY .
7130S.01I KRISTINA MARTIN, Secretary
AN ACT
To repeal sections 393.135 and 393.150, RSMo, and to enact in lieu thereof two new sections
relating to the regulation of public utilities.
Be it enacted by the General Assembly of the State of Missouri, as follows:
Section A. Sections 393.135 and 393.150, RSMo, are 1
repealed and two new sections enacted in lieu thereof, to be 2
known as sections 393.135 and 393.150, to read as follows:3
393.135. 1. Except as provided in subsection 2 of 1
this section, any charge made or demanded by an electrical 2
corporation for service, or in connection therewith, which 3
is based on the costs of construction in progress upon any 4
existing or new facility of the electrical corporation, or 5
any other cost associated with owning, operating, 6
maintaining, or financing any property before it is fully 7
operational and used for service, is unjust and 8
unreasonable, and is prohibited. 9
2. [(1) An electrical corporation may be permitted, 10
subject to the limitations in this subsection, to include 11
construction work in progress for any new natural gas- 12
generating unit in rate base. The inclusion of construction 13
work in progress allowed under this subsection shall be in 14
lieu of any otherwise applicable allowance for funds used 15
during construction that would have accrued from and after 16
the effective date of new base rates that reflect inclusion 17
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of the construction work in progress in rate base. The 18
commission shall determine, in a proceeding under section 19
393.170, the amount of construction work in progress that 20
may be included in rate base. The amount shall be limited 21
by: 22
(a) The estimated cost of such project; and 23
(b) Project expenditures made within the estimated 24
construction period for such project.] Base rate recoveries 25
arising from inclusion of construction work in progress in 26
rate base are subject to refund, with interest on the 27
refunded amount at the same rate as the rate of interest for 28
delinquent taxes determined by the director of revenue in 29
accordance with section 32.065, if, and to the extent the 30
commission determines, in a subsequent complaint or general 31
rate proceeding, that construction costs giving rise to the 32
construction work in progress included in rate base were 33
imprudently incurred or [if the project for which 34
construction costs have been included in the rate base is 35
not placed in service within a reasonable amount of time, as 36
determined by the commission] otherwise unreasonable. Rate 37
base used to determine return deferred under subdivision (2) 38
of subsection 3 of section 393.1400 shall include an offset 39
for rate base that has been used to determine return 40
included in base rates as a result of construction work in 41
progress inclusion in rate base under this subsection. The 42
offset shall apply from and after the in-service date of the 43
asset that has been used to determine return included in 44
base rates as a result of construction work in progress 45
inclusion in rate base under this subsection. 46
[(2) This subsection shall expire on December 31, 47
2035, unless the commission determines, after a hearing 48
conducted in 2035, upon a submission from an electrical 49
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corporation of an application requesting and demonstrating 50
that good cause exists to extend the effectiveness of this 51
subsection through December 31, 2045. The secretary of the 52
commission shall notify the revisor of statutes when the 53
conditions set forth for the extension of this subsection 54
have been met.] 55
393.150. 1. Whenever there shall be filed with the 1
commission by any gas corporation, electrical corporation, 2
water corporation or sewer corporation any schedule stating 3
a new rate or charge, or any new form of contract or 4
agreement, or any new rule, regulation or practice relating 5
to any rate, charge or service or to any general privilege 6
or facility, the commission shall have, and it is hereby 7
given, authority, either upon complaint or upon its own 8
initiative without complaint, at once, and if it so orders 9
without answer or other formal pleading by the interested 10
gas corporation, electrical corporation, water corporation 11
or sewer corporation, but upon reasonable notice, to enter 12
upon a hearing concerning the propriety of such rate, 13
charge, form of contract or agreement, rule, regulation or 14
practice, and pending such hearing and the decision thereon, 15
the commission upon filing with such schedule, and 16
delivering to the gas corporation, electrical corporation, 17
water corporation or sewer corporation affected thereby, a 18
statement in writing of its reasons for such suspension, may 19
suspend the operation of such schedule and defer the use of 20
such rate, charge, form of contract or agreement, rule, 21
regulation or practice, but not for a longer period than one 22
hundred and twenty days beyond the time when such rate, 23
charge, form of contract or agreement, rule, regulation or 24
practice would otherwise go into effect; and after full 25
hearing, whether completed before or after the rate, charge, 26
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form of contract or agreement, rule, regulation or practice 27
goes into effect, the commission may make such order in 28
reference to such rate, charge, form of contract or 29
agreement, rule, regulation or practice as would be proper 30
in a proceeding initiated after the rate, charge, form of 31
contract or agreement, rule, regulation or practice had 32
become effective. In any proceeding under this section 33
wherein testimony is prefiled, each party shall be afforded 34
an opportunity to respond to any rebuttal testimony and 35
exhibits of other parties through prefiled testimony. 36
2. If any such hearing cannot be concluded within the 37
period of suspension, as above stated, the commission may, 38
in its discretion, extend the time of suspension for a 39
further period not exceeding six months, the last day of 40
which period shall be considered the operation of law date. 41
At any hearing involving a rate sought to be increased, the 42
burden of proof to show that the increased rate or proposed 43
increased rate is just and reasonable shall be upon the gas 44
corporation, electrical corporation, water corporation or 45
sewer corporation, and the commission shall give to the 46
hearing and decision of such questions preference over all 47
other questions pending before it and decide the same as 48
speedily as possible. 49
3. [(1) Beginning July 1, 2026, the test year for 50
proceedings under this section shall, if requested by a gas 51
corporation, water corporation, or sewer corporation, be a 52
future year consisting of the first twelve full calendar 53
months after the operation of law date determined in 54
subsections 1 and 2 of this section for schedules stating 55
new base rates filed by a gas corporation, water 56
corporation, or sewer corporation under this section, unless 57
the commission makes a determination that using a future 58
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test year under this section is detrimental to the public 59
interest. For ratemaking purposes, the average of the 60
projected month-end total rate base amount during the future 61
test year shall be used to establish new base rates. Unless 62
otherwise ordered by the commission, new base rates shall 63
not go into effect before the first day of the future test 64
year. 65
(2) With respect to gas corporations, water 66
corporations, or sewer corporations that elect to utilize a 67
future test year and notwithstanding section 393.270 to the 68
contrary, within forty-five days of the end of the future 69
test year, such gas corporation, water corporation, or sewer 70
corporation shall update its base rates that were approved 71
by the commission in its report and order issued under 72
subsections 1 and 2 of this section to reflect the total 73
rate base, annualized depreciation expense, income tax 74
expense, payroll expense, employee benefits (other than 75
pensions and other post-retirement benefits), and rate case 76
expense at the end of the future test year. The total 77
ending rate base and expense items reflected in this update 78
shall not be greater than the total ending rate base and 79
expense items approved by the commission in its report and 80
order establishing base rates. The commission and parties 81
to the case shall have sixty days to review the updated 82
information provided by a gas corporation, water 83
corporation, or sewer corporation, unless any party who was 84
a party to the rate case files a request for a hearing at 85
which point the commission shall suspend the filed tariffs 86
and order a procedural schedule. The commission shall order 87
the corporation to file new tariff sheets that reflect any 88
update approved by the commission. 89
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4. A gas corporation, water corporation, or sewer 90
corporation that requests a test year under subsection 3 of 91
this section shall not recover the costs of any plant 92
investments made during the test year period under any of 93
the mechanisms provided for in section 393.1000, 393.1003, 94
393.1006, 393.1009, 393.1012, 393.1015, 393.1500, 393.1503, 95
393.1506, or 393.1509. 96
5. For a gas corporation, water corporation, or sewer 97
corporation that elected to use a future test year, a 98
reconciliation of the rate base at the end of the future 99
test year shall be provided to the commission within forty- 100
five days of the end of the future test year. If the actual 101
average month-end total rate base amount during the future 102
test year is less than the average month-end total rate base 103
amount used to set base rates in the prior general rate 104
proceeding under subsections 1 and 2 of this section, and 105
notwithstanding section 393.270 to the contrary, the portion 106
of the annual revenue requirement comprising the average 107
total rate base difference shall be returned to customers. 108
The revenue requirement shall be calculated using rate base, 109
depreciation expense, income tax expense, and the pretax 110
rate of return from the prior general rate proceeding under 111
subsections 1 and 2 of this section. The difference in 112
revenue requirement shall be placed into a regulatory 113
liability to be returned to customers in the next general 114
rate proceeding with such regulatory liability to accrue 115
carrying costs at the utility's weighted average cost of 116
capital. 117
6.] The commission may take into account any change in 118
business risk to the corporation resulting from 119
implementation of [the] any adjustment mechanism in setting 120
the corporation's allowed return in any rate proceeding, in 121
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addition to any other changes in business risk experienced 122
by the corporation. 123
[7. For a gas corporation, water corporation, or sewer 124
corporation that elected to use a future test year, a 125
reconciliation of depreciation expense, income tax expense, 126
payroll expense, employee benefits except for pensions and 127
other postretirement benefits, and rate case expense 128
incurred during the future test year shall be provided to 129
the commission within forty-five days of the end of the 130
future test year. If the actual amounts for these expenses 131
are less than the amounts used to calculate the revenue 132
requirement in the prior general rate proceeding under 133
subsections 1 and 2 of this section, and notwithstanding 134
section 393.270 to the contrary, the differences shall be 135
returned to customers. The difference in revenue 136
requirement shall be placed into a regulatory liability to 137
be returned to customers in the next general rate case with 138
such regulatory liability to accrue carrying costs at the 139
utility's weighted average cost of capital. Expense 140
differences to be returned to customers resulting from this 141
reconciliation shall not be used to offset additional 142
capital spending in the reconciliation described in 143
subsection 5 of this section. 144
8. The commission shall promulgate rules to implement 145
the provisions of this section no later than July 1, 2027. 146
Such rules shall include a procedure allowing any party to a 147
rate proceeding that utilizes a future test year as provided 148
in subsection 3 of this section to undertake a meaningful 149
review of the update provided by the gas corporation, water 150
corporation, or sewer corporation under subsection 3 of this 151
section and the reconciliations provided by the gas 152
corporation, water corporation, or sewer corporation under 153
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subsections 5 and 7 of this section, and to argue for the 154
disallowance of any costs included in the total rate base, 155
depreciation expense, income tax expense, payroll expense, 156
employee benefits (other than pensions and other 157
postretirement benefits), and rate case expense at the end 158
of the future test year that differs from the projected 159
values upon which the commission relied in issuing its 160
report and order to approve new base rates under subsections 161
1 and 2 of this section. Any rule or portion of a rule, as 162
that term is defined in section 536.010, that is created 163
under the authority delegated in this section shall become 164
effective only if it complies with and is subject to all of 165
the provisions of chapter 536 and, if applicable, section 166
536.028. This section and chapter 536 are nonseverable and 167
if any of the powers vested with the general assembly 168
pursuant to chapter 536 to review, to delay the effective 169
date, or to disapprove and annul a rule are subsequently 170
held unconstitutional, then the grant of rulemaking 171
authority and any rule proposed or adopted after August 28, 172
2025, shall be invalid and void. 173
9.] 4. For purposes of this section, the following 174
terms shall mean: 175
(1) "Base rates", rates or charges for public utility 176
service other than rates or charges under any rate 177
adjustment mechanism including, but not limited to, those 178
approved under the provisions of sections 386.266, 393.1000, 179
393.1009, 393.1030, 393.1075, and 393.1500; 180
(2) "Revenue requirement", the amount of retail 181
revenues from base rates charged to retail customers for 182
public utility service needed for a public utility to 183
recover its cost to provide utility service including 184
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reasonable and necessary expenses, prudent investments, and 185
the cost of capital. 186
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