PSC lays out guidelines for new legislation on Missouri utilities

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JEFFERSON CITY, Mo. – After months of in-depth research and study, the Public Service Commission (PSC) has issued its final report on how Missouri policies on electric utility regulation could be improved. And in doing so, they also laid a set of guidelines for the Missouri legislature on any future legislation on the issue.

The eight-page order, released on Tuesday, offers analysis on the issues and possible solutions to improve the way the PSC regulates electric utilities in the Show Me State.

“We issued an order on June 8th of this year, opening a working docket to look at this issue, hopefully to gather information and facilitate a productive dialogue between stakeholders,” PSC Chairman Daniel Hall said. “We received multiple rounds of extensive written comments, and also convened a well-attended workshop on the matter.”

On October 17th, the PSC staff submitted a report to the commission with their findings, describing and evaluating the suggestions from stakeholders. They also looked into whether there was a need for legislative reform of the policies in place, and what the scope of those changes might be.

One item that the report highlighted was that electric utilities in Missouri cannot earn a return or recover amounts invested in infrastructure until the rate case is finished and the plant in question has been put into service. The PSC staff says this process can cause delays in investment recovery for the utilities, and state that “although regulatory lag and utility earnings have not been a serious problem to date, minor modifications to the current regulatory structure may be necessary in the future to encourage significant additional investment in grid modernization.”

The commission said that, based upon the information received in the workshop, some utilities would like to automate their electric grids, using modern technologies to adapt to the changing needs of consumers.

The order also noted that the potential benefits of modernizing those technologies would always have to be weighed against the cost, but the staff report found several benefits for doing so. Those include the ability to connect or disconnect customers remotely, the ability to possibly resolve service issues more quickly, and reduce how long power outages last – all without the need to send a technician. In turn, these factors could potentially reduce utility costs for the ratepayers.

The commission voted 4-0 in approval of the order, as Commissioner Maida Coleman was absent from the Tuesday afternoon agenda meeting.

“The Commission generally agrees with and supports the analysis, conclusions, and recommendations presented in the Staff Report. The Commission also recognizes the General Assembly may determine that it should be the policy of this state to encourage utility investment in grid modernization, enacting legislation to encourage such investment,” the Commission stated in a release.

The commission also laid out some guides for Missouri’s legislature, recommending that the General Assembly take the following four principles into consideration while drafting any legislative proposal:

• Missouri’s current regulatory structure has functioned very effectively for over a century, and there is no need for a massive, radical overhaul.
• Any new mechanism must not impede the Commission’s authority or ability to meet its statutory obligations to set just and reasonable rates while balancing the interests of utilities and their customers.
• Any modification of the current regulatory structure should be narrowly tailored.
• As with the use of other modified rate mechanisms, a utility’s use of any new mechanism must be contingent upon Commission review and authorization.

One final thing the commission drew attention to before finishing business on the matter was to point out what was written in Footnote Number 5 of the report, which says: “Nothing in this report constitutes an endorsement of or opposition to any specific legislation.”

Commissioner Stephen Stoll was the one who brought attention to it, saying, “I think the PSC needs to maintain its neutrality to be there as a resource for the legislature and others. I think that is an important statement, and I hope that people don’t read other things into this, but as far as I’m concerned, that is exactly my position.”

That sentiment was shared by the other commissioners present at the meeting.

“As a former legislator, I think many of us realize how they take things over there. I do think the report is a summary of some things that we believe could be of assistance to our utilities and stakeholders, ratepayers, etc,” Commissioner Bill Kenney said. “But in no way are we suggesting or endorsing any type of specific legislation.”

“Usually in a bureaucracy, there’s resistance to change. So I was very pleased to see the report that staff came back with was not just a blanket note. But as we all know, there’s something in here for everybody – they will pick it apart. Hopefully, they will resist that urge, but we all know the true nature of everyone in the legislature,” Commissioner Scott Rupp said. “So it will be an interesting next few days to see how this report is viewed by all of the different camps. But overall, it was tactful, balanced and well done.”

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