SB 44 from Sen. Bill White allows water and sewer companies to request rate changes more often. Under current law, utilities go to the Public Service Commission (PSC) for a rate adjustment on a three-year cycle. The legislation would allow companies serving more than 8,000 customers to request a slight increase every six months through a water and sewer infrastructure rate adjustment (WSIRA) to keep up with the conditions of equipment and speed up cost recovery.
“This saves ratepayers money,” White said while the bill was being perfected in the upper chamber. “If you are going to replace a valve and you don’t have the ability to raise the capital to replace the valve now, when you replace it in the future it will cost more money — any amount of putting off will cost more in the future.”
The WSIRA charge would be clearly identified on customers’ bills; the surcharge will be its own dedicated line item under the language.
Representatives from Missouri-American Water Company, including Vice President of Operations Jeffrey Kaiser, testified in committee the bill would allow companies to implement gradual rate increases rather than raising customer bills all at once. Kaiser said the current cycle tied their hands when it came to issues arising between rate cases.
“This bill allows us to recover the cost of improvements and replacements outside of a general rate case,” Kaiser told The Missouri Times. “It would allow us to attract capital from our investors so we can continue to invest in our infrastructure. … There will still be a struggle to make that recovery, but this is the type of mechanism that allows and encourages the investment that is needed and allows us to do our part with our systems and allow other utilities to be more effective and proactive with their investments.”
Kaiser pointed to the American Society of Civil Engineers’ 2018 infrastructure report card which gave Missouri a C- for water and sewer systems. He said being able to make investments on a more regular basis would help boost the state’s infrastructure and allow companies to keep up with maintenance needs.
St. Louis County implements its own version of the system, and other states — including neighbors Kentucky, Iowa, and Illinois — have similar programs. The bill did see some pushback during its time in the Senate with legislators raising concerns about companies circumventing the commission’s authority and gouging prices.
Despite not taking an official position on the legislation, the PSC’s legislative director said the commission’s ability to examine requests and exercise its judgment would remain intact under the bill.
“The language specifies that if the Commission finds the water or sewer corporation’s petition fulfills all the requirements, a WSIRA shall be authorized,” he told The Missouri Times. “Within that process, there is still a review of the underlying project and the project’s costs being appropriate and in accordance with the statutes, as well as reviews that take place in the general rate cases to ensure adequate oversight.”
The bill awaits Gov. Mike Parson’s signature. The change would take effect on Aug. 28.