JEFFERSON CITY – The Missouri Senate approved a measure today that will reform the state’s century-old regulatory environment by capping rates and allowing for grid modernization. Senate Bill 564 will not only help make significant improvement to Missouri’s regulatory environment, it will also enable our infrastructure to be modernized under the current Public Service Commission (PSC) framework.

Senate Leader, Ron Richard, R-Joplin, said updating the grid will promote job creation and economic growth, and it will help keep and attract new businesses.

“Low electricity prices means Missouri businesses, including manufactures, can operate at a lower cost,” said Richard. “Future jobs depend on low energy costs. This bill has the potential to create up to 3,000 jobs across the state, generate $65 million in tax revenue and enable an investment of more than $1 billion in grid modernization.”

Missouri’s energy policy currently runs under a 100 year old regulatory framework. Technology has changed a lot over the last century. The way energy is delivered has changed. Missouri’s energy costs have risen 46.7 percent since 2007. The national average is 11.2 percent over that same time period. Forty-six other states have reformed their energy regulations.



Bill sponsor, Sen. Ed Emery, R-Lamar, said Missouri is constantly playing catch up with its neighboring states and falling way behind.

“Missouri’s energy policy is old, outdated and simply broken,” said Emery. “Our rates have gone up four times faster than the national average in the past decade. Missourians need energy that is smart, secure and stable. This measure will bring predictability and security to our energy grid without taking any authority away from the Public Service Commission.”

The measure would cap rates for five years for utility companies that file a capital investment plan with the PSC. This will allow the utility company to replace, modernize and secure its infrastructure while the PSC still has authority and oversight over the projects. Also, provisions of this legislation will allow rates to be cut more than $100 million per year through an accelerated process within the Public Service Commission due to the tax relief provided under the recent reduction of federal corporate tax rates. This provision will provide rate relief to Ameren Missouri customers within 90 days of the effective date of this legislation where rate reduction using the current process could have taken years.

Majority Floor Leader Mike Kehoe, R-Jefferson City, said with improvements to the grid, Missouri consumers could save millions, and it would again make the Show-Me State a low-energy cost state.




“Current rate increases, sometimes at 5 or 6 percent, are hurting businesses and Missouri families who foot the bill,” said Kehoe. “Reforming our energy regulatory environment means families get to keep more of their paycheck. It is a good investment for businesses, consumers, and utilities.”

SS#5/SB 564 – This act modifies provisions relating to public utilities.

RATE ADJUSTMENTS OUTSIDE OF GENERAL RATE PROCEEDINGS (Section 386.266) – Currently, gas corporations may apply to the Public Service Commission to approve rate schedules authorizing periodic rate adjustments outside of general rate proceedings due to changes in customer usage due to weather and conservation. Under this act, electrical corporations shall also be able to make such application to the Commission. However, no electrical corporation shall make an application to the Commission if such corporation makes certain deferrals as authorized under this act.

This provision shall apply to electrical corporations beginning January 1, 2019, and shall expire on January 1, 2029.

This provision is similar to SB 642 (2018).

SURVEILLANCE MONITORING REPORT (Section 386.266) – Under this act, public utilities that utilize a rate schedule authorizing periodic rate adjustments outside of a general rate proceeding due to changes in customer usage shall file a quarterly surveillance monitoring report. Such report shall consist of 5 parts, including a rate base quanitifications report, a capitalization quantifications report, an income statement, a jurisdictional allocation factor report, and financial data notes, as set forth in this act.

This provision shall expire on January 1, 2029.

This provision is similar to a provision contained in SB 972 (2018).

COMPLAINT PROCEDURE (Section 386.390) – Currently, certain organizations may make a complaint against a public utility by setting forth any act committed or omitted by a public utility, including any rule, regulation or charge established by the commission in violation of any law, rule, order, or decision. Under this act, the complaint shall set forth the act committed or omitted by the public utility in violation of any provision of law subject to the Public Service Commission’s authority, or of any rule, utility tariff, order, or decision of the Commission.

2017 TAX CUT AND JOBS ACT (Section 393.137) – Under this act, if an electrical corporation’s rates have not been adjusted to reflect the federal 2017 Tax Cut and Jobs Act, the Public Service Commission shall have a one-time authority to adjust such corporation’s rates prospectively. The Public Service Commission shall also require such corporation to defer to a regulatory asset the financial impact of such federal act for the period of January 1, 2018, through the date the corporation’s rates are adjusted, and such asset shall be included in the corporation’s revenue requirement in its next general rate proceeding.

Upon good cause shown by the electrical corporation, the Public Service Commission may, in lieu of the one-time rate change and deferral, allow a deferral in whole or in part of such federal act’s financial impacts to a regulatory asset starting January 1, 2018, through the effective date of rates in the corporation’s next general rate proceeding. Such deferred amounts shall be included in the corporation’s revenue requirement in its next general rate proceeding.

This section shall only apply to electrical corporations that do not have a general rate proceeding pending before the Public Service Commission as of the later of February 1, 2018, or the effective date of this section.

This provision contains an emergency clause.

CERTIFICATE OF CONVENIENCE AND NECESSITY (Section 393.170) – Currently, no public utility shall begin construction of any plant or system without having first obtained the permission and approval of the Public Service Commission. Under this act, this requirement shall not apply to the construction of an energy generation unit that has a capacity of 1 MW or less.

This provision is similar to a provision contained in SCS/SB 1028 (2016).

PLANT-IN-SERVICE ACCOUNTING (Section 393.1400) – This act requires electrical corporations that notify the Public Service Commission to defer and recover 85% of all depreciation expense and return for qualifying electric plant recorded to plant-in-service on the utility’s books. An electrical corporation’s election shall allow it to make such deferrals until December 31, 2023, unless the corporation requests, and the Public Service Commission approves, continuation of such deferrals until December 31, 2028. The balance in the associated deferred regulatory asset account, except any prudence disallowances, shall be included in determining the electrical corporation’s rate base during subsequent general rate proceedings. Further, such regulatory asset balances shall include carrying costs at the electrical corporation’s weighted average cost of capital as set forth in this act, plus taxes, and shall be amortized and recovered in rates over a period of 20 years.

This provision expires on December 31, 2028, except that an electrical corporation shall obtain an order by the Public Service Commission to continue to utilize plant-in-service accounting from January 1, 2024, to December 31, 2028. The Commission shall have the authority to grant or deny such approval based upon the Commission’s evaluation of the costs and benefits of such deferrals and the continuing need of the corporation, but shall not be authorized to condition such approval or modify any deferrals or discounts authorized under this act.

Under this act, no electrical corporation shall notify the Public Service Commission to defer and recover such depreciation expense and return authorized under this act if such corporation has been approved by the Commission to make periodic rate adjustments outside of general rate proceedings due to changes in customer usage due to weather and conservation.

This provision is similar to provisions contained in SB 310 (2015), HB 925 (2015), SB 909 (2014), and HB 2024 (2014).

CAPITAL INVESTMENT PLAN (Section 393.1400) – Beginning in 2019, this act requires electrical corporations that defer depreciation expense and return to file with the Public Service Commission a 5-year capital investment plan, and a specific capital investment plan for the following year, on February 28 of each year setting forth capital expenditures the corporation will pursue in furtherance of replacing, modernizing, and securing its infrastructure. For each of the first five years that an electrical corporation defers depreciation expense and return, the purchase and installation of smart meters shall constitute no more than 6% of capital expenditures during any given year under the plan. Further, at least 25% of the cost of each year’s plan shall be comprised of grid modernization projects, as set forth in this act.

Within 30 days of submitting such investment plan to the Public Service Commission, the electrical corporation shall hold a public stakeholder meeting to answer questions and receive feedback on the plan. After feedback is received, the electrical corporation may file a notice with the Commission to make modifications to the investment plan that it has accepted. Further, changes to the plan shall not constitute evidence of imprudence, and submission of the plan shall not affect the Public Service Commission’s authority to grant or deny any certificate of convenience and necessity. This act also requires electrical corporations, in every year that such corporation submits a capital investment plan, to submit a report to the Commission detailing actual capital investments made the previous year.

This provision expires on December 31, 2028.

This provision is similar to provisions contained in SCS/SB 1028 (2016) and SS/HCS/HB 2689 (2016).

INVESTMENTS IN SMALL SCALE AND PILOT PROJECTS (Section 393.1610) – This act allows the Public Service Commission to approve investments in small scale or pilot projects if the project is designed to advance the electrical corporation’s knowledge of deploying certain technologies, including gaining operating efficiencies that result in customer savings and benefits.

DISCOUNTED ELECTRIC RATES (Section 393.1640) – This act requires electrical corporations to make available discounted rates for qualifying customers upon application and upon a public announcement of a growth project through December 31, 2023, unless requested and approved by the Public Service Commission to offers such discounts through December 31, 2028. Any customer that receives local, regional, or state economic development incentives, that adds incremental load with average monthly demand of at least 300kW and a load factor of at least 55% within 2 years, and that meets criteria set forth in the electrical corporation’s economic development rider tariff sheet, shall qualify for a 40% discount average for up to 5 years on all base rate components, and an additional 10% discount for 1 year after the expiration of the initial discount if the customer takes service from an under-utilized circuit.

This act requires the cents per kilowatt-hour realization from such discounted rate to be higher than the electrical corporation’s variable cost to serve such accounts, and requires the discounted rate to make a positive contribution to fixed costs associated with such service. If in a subsequent general rate proceeding, the Public Service Commission determines the discounted rate is not adequate to cover such costs, the Commission will increase the rate prospectively to the extent necessary to do so. Any reduced revenues arising from the discounted rate shall be borne by all of the electrical corporation’s customer classes.

This provision expires on December 31, 2028, except that an electrical corporation shall obtain an order by the Public Service Commission to continue to utilize plant-in-service accounting from January 1, 2024, to December 31, 2028, in order to continue to provide the discounts allowed under this act from such dates.

This provision is similar to a provision contained in SS/HCS/HB 2689 (2016).

CONTRACTOR PRE-QUALIFICATION PROCESS (Section 393.1650) – This act requires electrical corporations with more than 1 million Missouri customers to develop a qualification process for contractors seeking to provide construction services for distribution system projects. Contractors shall have the opportunity to register on the electrical corporation’s vendor registration site and be evaluated for bid opportunities. The electrical corporation may specify the eligibility requirements that the contractor shall meet in order to qualify to participate in the competitive bidding process, and the electrical corporation shall not weight any contractor favorably or unfavorably due to an affiliation with a union, except when work is being performed under a project labor agreement. Contractors that meet the eligibility requirements shall be able to participate in the competitive bidding process, and the contractor making the lowest and best bid shall be awarded such contract.

Within 30 days of the effective date of this act, the electrical corporation shall file a verified statement with the Public Service Commission stating that it has in place a pre-qualification process. Any general rate proceeding filing thereafter shall be accompanied with a verified statement that the electrical corporation is using a competitive bidding process for installing no less than 10% of combined external installation expenditures in Missouri for construction services on distribution system projects. Nothing in this act shall require an electrical corporation to use a qualified contractor or competitive bidding process in the case of an emergency, or to terminate any existing contract prior to its expiration.

Under this act, the Public Service Commission shall prepare a report for the General Assembly annually, with the first report being submitted by December 31, 2020, on the process established under this act.

This section is similar to a provision contained in SS/HCS/HB 2689 (2016).

RATE BASE INCREASE REGULATORY LIABILITY AND LIMITATIONS (Section 393.1655) – This act requires an electrical corporation that elects to defer certain depreciation and return for electric plant placed-in-service, to hold constant the corporation’s base rates for 3 years for electrical corporations with more than 200,000 Missouri customers, except such rate may not be maintained if the Public Service Commission determines that a force majeure event has occurred. This limitation shall not affect the electrical corporation’s ability to adjust its non-base rates that arise from Commission-approved rate adjustment mechanisms during such 3 year period.

For electrical corporations that have a general rate proceeding pending before the Public Service Commission, if the difference between the corporation’s average overall rate at any point, and the corporation’s average overall rate as of the date new base rates are set in the corporation’s most recently completed prior to the electrical corporation electing to make such deferrals, reflects a growth rate of more than 3%, the corporation shall not recover any amount in excess of 3% as a performance penalty. For electrical corporations that do not have a general rate proceeding pending before the Public Service Commission, if the difference between the corporation’s average overall rate at any point, and the average of (1) the corporation’s average overall rate as of the date new base rates are set in the corporation’s most recently completed prior to the electrical corporation electing to make such deferrals, and (2) the corporation’s average overall rate set due to the implementation of the federal 2017 Tax Cut and Jobs Act, reflects a growth rate of more than 2.85%, the corporation shall not recover any amount in excess of 2.85% as a performance penalty.

Additionally, if a change in rates charged under any existing Commission-approved rate adjustment mechanism would cause the corporation’s rate to exceed the 3% or 2.85% limitation, respectively, the corporation shall reduce the rates charged under that adjustment mechanism in an amount to ensure such limitation is not exceeded, and defer any unrecovered amounts to a regulatory asset to be recovered and amortized in base rates.

Further, if the difference between the electrical corporation’s class average overall rate while this section applies to the electrical corporation, and the class average overall rate of the date new rates are set in the corporation’s most recently completed prior to the electrical corporation electing to make such deferrals, reflects a growth rate of more than 2% for the large power service rate class, such increase shall be limited to 2%, with such reduced revenues arising from limiting the large power service rate class to be allocated to all other customers.

UTILITY-OWNED SOLAR FACILITIES (Section 393.1665) – This act requires electrical corporations to invest in utility-owned solar facilities. Electrical corporations with more than 1 million Missouri customers shall invest $14 million, corporations with less than 1 million but more than 200,000 customers shall invest $4 million, and corporations with 200,000 or fewer customers shall invest $3.5 million in utility-owned solar facilities located in Missouri or an adjacent state between the effective date of this act and December 31, 2023. If the rate impact of investment in such facilities would cause the electrical corporation to exceed a 1% maximum average retail rate increase, such excess costs shall be deferred to a regulatory asset, including carrying costs at the electrical corporation’s weighted average cost of capital, and shall be recovered in rates.

Under this act, an electrical corporation’s decision to invest in utility-owned solar facilities shall be deemed prudent, and permission from the Public Service Commission for construction of such facilities shall not be required.

This section shall expire on December 31, 2023, except that any regulatory asset balance created under this section shall be recoverable after such date.

SOLAR REBATES (Section 393.1670) – Beginning January 1, 2019, this act requires electrical corporations to make available solar rebates in amounts set forth in this act. Such rebates shall apply to new or expanded solar electric systems up to 25 kW for residential customers, and up to 150 kW for nonresidential customers. Such rebates shall also not exceed certain limitations set forth in this act, including that electrical corporations with more than 1 million Missouri customers shall not be obligated to pay rebates exceeding $5.6 million per year, or $28 million in the aggregate from 2019 to 2023. Electrical corporations less than 1 million but more than 200,000 customers shall not be obligated to pay rebates exceeding $1.6 million per year, or $8 million in the aggregate from 2019 to 2023. Electrical corporations with 200,000 or less Missouri customers shall not be obligated to pay solar rebates exceeding $1.4 million per year, or $7 million in the aggregate.

Under this act, the electrical corporation shall be permitted to recover the cost of all solar rebate payments through rates, and shall be permitted to defer and amortize the recovery of such costs, including interest at the corporation’s short-term borrowing rate, with such recovery not to exceed 5 years. If recovery of such costs would cause the electrical corporation to exceed a 1% maximum average retail rate increase, such excess costs shall be deferred to a regulatory asset, including carrying costs at the electrical corporation’s weighted average cost of capital, and shall be recovered in rates.

Any reductions in electrical corporation loads as a result of the installation of solar systems not owned by the electrical corporation shall constitute conservation.

This section shall expire on December 31, 2023, except that any regulatory asset balance created under this section shall be recoverable after such date.

This section is similar to a provision contained in SS/SB 1028 (2016).

This act contains a non-severability clause.

This act contains provisions similar to provisions contained in SB 190 (2017), SCS/SB 242 (2017), HB 628 (2017), SCS/HCS/HB 661 (2017), and HCS/HB 747 (2017).