The feasibility of how utilities handle infrastructure replacement cases — such as with corroded cast iron pipes — is in question following a recent appeals court decision. And for one Missouri company, a bevy of jobs are on the line.
The Western District Court of Appeals remanded a prior Public Service Commission (PSC) order related to Spire Missouri’s Infrastructure System Replacement Surcharges (ISRS) in November; whether some of the replaced pipes were actually “worn out or deteriorated” had been questioned during the case. The utility company had initially requested an adjustment to its ISRS to recover costs from pipe replacements it made in 2017 and 2018.
An ISRS appears on most natural gas customers’ bills to offset what companies spend to replace pipeline systems — often to keep in compliance with local, state, or federal regulations — after a rate case. An ISRS is regulated by the PSC.
The decision noted Spire’s replacement program “replaces or retires” cast iron, steel, and plastic pipes. Cast iron pipes have been deemed unsafe because of graphitization — a degradation procession weakening metals and allowing for leaks — and steel pipes can quickly erode. And following a 2003 decision by the General Assembly, Spire had accelerated that process with what officials said was an investment of up to $300 million.
Craig Hoeferline, Spire’s vice president of operations services, testified the company will replace pipes as workers come across them during a “leak survey” or “leak crawl.” He said whenever there is a leak in bare steel and cast iron structures, “by definition the structures are worn out and deteriorated.”
“We’re about two-thirds of the way through a 25 year accelerated replacement [process],” Larry Pleus, the natural gas company’s director of government affairs, told The Missouri Times. “So here we sit. There’s been no issue with it for 15 years, and now all of a sudden everything is thrown into limbo. How are we going to deal with this in the future — or even right now?”
Pleus said Spire has about 1,000 employees in Missouri — in addition to hundreds of contractors in the Kansas City area — whose jobs are dedicated to the accelerated replacement of these pipes. And these workers are concerned about their futures, Pleus said.
“They understand the company can’t keep that many employees on if financially we have to cut that work … by probably 75 percent to not incur some kind of financial ramifications,” he said.
Spire does plan to appeal the decision — although officials are not hopeful a higher court will intervene. In the meantime, Spire is looking to the General Assembly for a fix.
Sen. Wayne Wallingford, a Republican, is behind SB 618, legislation that would change the definition of “eligible infrastructure system replacements” to include cast iron, steel, and other pipes that “can no longer be installed under current applicable safety standards,” among other things. He said his bill would “put it back to where it was for the last 16 years.”
The bill is scheduled to be heard before the Senate’s Commerce, Consumer Protection, Energy and the Environment Committee next week.
“This is a safety and reliability issue. And it’s a financial issue for utilities,” Pleus said. “This is a model program … so you scratch your head as to why they are challenging this.”
Kaitlyn Schallhorn is the editor of The Missouri Times. She joined the newspaper in early 2019 after working as a reporter for Fox News in New York City.
Throughout her career, Kaitlyn has covered political campaigns across the U.S., including the 2016 presidential election, and humanitarian aid efforts in Africa and the Middle East.
She is a native of Missouri who studied journalism at Winthrop University in South Carolina. She is also an alumna of the National Journalism Center in Washington, D.C.
Contact Kaitlyn at email@example.com.