Spire customers to see a rate decrease starting March 28
JEFFERSON CITY, Mo. – After months of hearings, and weeks of re-working the language of the proposed order, the Missouri Public Service Commission has signed off on Spire Missouri’s rate case.
Every member of the commission agreed that the company’s first rate case since the combining of Laclede and Missouri Gas Energy (MGE) proved to be the most complex rate case they have dealt with in quite some time.
“This was a very difficult case, and there was a lot of compromise taking place in it, and I appreciate the work by everyone,” Commissioner Bill Kenney stated.
“It reminds me of going to Rate School 101, which, by the way, I didn’t like,” Commissioner Maida Coleman said, receiving a chuckle from those attending the agenda meeting. “But it was an opportunity to remember all of the ins and outs of what we do here.”
And in truth, the Spire rate case proved to be one of the most trying cases the commission has dealt with in recent years. The process has been marked by long hearings, discussion, disagreements, and compromise. That’s because of the litigating of the rate case, as normally agreed upon issues like capital structure or pension expense was not settled on before the hearings, and because of that, Spire Missouri’s rate case has become perhaps one of the most in-depth rate case reviews to occur in years.
The case itself is significant for a number of reasons, not just because of the length of the process, but because of the precedent it could set in terms of regulation by the commission staff.
The 154-page order addresses a number of topics, including capital structure, pension expenses, tax cuts, regulatory lag, expansion of low-income assistance programs, and sharing the rate case expense.
“This is good ratemaking, and we aired out every possible issue, with lots of discussion and disagreements,” Commissioner Scott Rupp said. “There are things in here that I didn’t want, but I am pleased with the outcome.”
Chairman Hall noted that the rate case had also brought about a number of firsts, one, in particular, he was pleased with being the implementation of a weather adjustment rider.
Hall did note that the ROE was a little higher than he would have liked, and said that he would have supported a somewhat different capital structure.
The agreed-upon capital structure does not include short-term debt and will utilize a true-up of 54.2 percent in equity and 45.8 percent in long-term debt. The PSC also ruled that it would be reasonable that the shareholders and ratepayers who benefit from the rate case should share in the rate case expense, and that Spire should receive a rate recovery of 50 percent for its expenses – except in the matter of customer notices and a depreciation study.
In addition to that, it marks the first rate case in which the PSC has dealt with the new federal tax reforms. Addressing that issue, the PSC is asking that trackers be put in place to watch for over or under-collection in rates, as well as to the ADIT and any amounts of property tax expenses.
In the end, the PSC signed off on the rate case with a 5-0 vote, and the rate case carries an effective date of March 3, 2018.
Following the decision, Spire released the following statement regarding the rate case decision:
“Today’s decision is a result of Spire’s success in becoming an even more efficient, customer-focused company. While we are still analyzing the impact of the final order from the Missouri Public Service Commission and will seek to clarify the decisions on several issues, we are pleased to announce Spire customers will see a rate decrease starting March 28.
“We agreed to lower rates, despite the federal tax cuts happening outside of the review period for our case, because it’s the right thing to do for our customers. The outcome of this case will help us recover our incremental costs, and by becoming the first Missouri utility to share the benefits of the tax reduction, we can still pass along a net rate decrease for our customers. These rates will also provide more funding to help customers better manage their bills, from energy assistance for low-income customers to efficiency programs to help conserve energy use.
“Our Missouri natural gas customers pay less today than they did a decade ago for service that is better and more reliable thanks to an improved customer experience through our new web portal and hundreds of miles of pipeline upgrades. For more than eight years we have been able to forego increasing base natural gas rates for anything other than investments in safety-related and mandated public improvements. That’s because our growth into the nation’s fifth-largest publicly traded gas utility has produced more than $70 million in annual savings for Missouri natural gas customers.
“Spire employees have worked tirelessly to remake our company with the aim of providing even better, more cost-effective service for our customers while supporting our communities. The results have been extraordinary. I want to thank every single one of our employees for their efforts to transform Spire. We couldn’t be prouder.”
—Steve Lindsey, President and CEO of Gas Utilities
Here’s the full report and order:
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Benjamin Peters was a reporter for The Missouri Times and Missouri Times Magazine and also produced the #MoLeg Podcast. He joined The Missouri Times in 2016 after working as a sports editor and TV news producer in mid-Missouri. Benjamin is a graduate of Missouri State University in Springfield.
