386.266. Rate schedules for interim energy charges or periodic rate adjustment--application for approval, procedure--rulemaking authority--effective date--task force to be appointed.

MISSOURI STATUTES AND CODES

386.266. Rate schedules for interim energy charges or periodic rate adjustment--application for approval, procedure--rulemaking authority--effective date--task force to be appointed.

Rate schedules for interim energy charges or periodic rateadjustment--application for approval, procedure--rulemakingauthority--effective date--task force to be appointed.

386.266. 1. Subject to the requirements of this section, any electricalcorporation may make an application to the commission to approve rateschedules authorizing an interim energy charge, or periodic rate adjustmentsoutside of general rate proceedings to reflect increases and decreases in itsprudently incurred fuel and purchased-power costs, including transportation.The commission may, in accordance with existing law, include in such rateschedules features designed to provide the electrical corporation withincentives to improve the efficiency and cost-effectiveness of its fuel andpurchased-power procurement activities.

2. Subject to the requirements of this section, any electrical, gas, orwater corporation may make an application to the commission to approve rateschedules authorizing periodic rate adjustments outside of general rateproceedings to reflect increases and decreases in its prudently incurredcosts, whether capital or expense, to comply with any federal, state, or localenvironmental law, regulation, or rule. Any rate adjustment made under suchrate schedules shall not exceed an annual amount equal to two and one-halfpercent of the electrical, gas, or water corporation's Missouri grossjurisdictional revenues, excluding gross receipts tax, sales tax and othersimilar pass-through taxes not included in tariffed rates, for regulatedservices as established in the utility's most recent general rate case orcomplaint proceeding. In addition to the rate adjustment, the electrical,gas, or water corporation shall be permitted to collect any applicable grossreceipts tax, sales tax, or other similar pass-through taxes, and such taxesshall not be counted against the two and one-half percent rate adjustment cap. Any costs not recovered as a result of the annual two and one-half percentlimitation on rate adjustments may be deferred, at a carrying cost each monthequal to the utilities net of tax cost of capital, for recovery in asubsequent year or in the corporation's next general rate case or complaintproceeding.

3. Subject to the requirements of this section, any gas corporation maymake an application to the commission to approve rate schedules authorizingperiodic rate adjustments outside of general rate proceedings to reflect thenongas revenue effects of increases or decreases in residential and commercialcustomer usage due to variations in either weather, conservation, or both.

4. The commission shall have the power to approve, modify, or rejectadjustment mechanisms submitted under subsections 1 to 3 of this section onlyafter providing the opportunity for a full hearing in a general rateproceeding, including a general rate proceeding initiated by complaint. Thecommission may approve such rate schedules after considering all relevantfactors which may affect the costs or overall rates and charges of thecorporation, provided that it finds that the adjustment mechanism set forth inthe schedules:

(1) Is reasonably designed to provide the utility with a sufficientopportunity to earn a fair return on equity;

(2) Includes provisions for an annual true-up which shall accurately andappropriately remedy any over- or under-collections, including interest at theutility's short-term borrowing rate, through subsequent rate adjustments orrefunds;

(3) In the case of an adjustment mechanism submitted under subsections 1and 2 of this section, includes provisions requiring that the utility file ageneral rate case with the effective date of new rates to be no later thanfour years after the effective date of the commission order implementing theadjustment mechanism. However, with respect to each mechanism, the four-yearperiod shall not include any periods in which the utility is prohibited fromcollecting any charges under the adjustment mechanism, or any period for whichcharges collected under the adjustment mechanism must be fully refunded. Inthe event a court determines that the adjustment mechanism is unlawful and allmoneys collected thereunder are fully refunded, the utility shall be relievedof any obligation under that adjustment mechanism to file a rate case;

(4) In the case of an adjustment mechanism submitted under subsection 1or 2 of this section, includes provisions for prudence reviews of the costssubject to the adjustment mechanism no less frequently than at eighteen-monthintervals, and shall require refund of any imprudently incurred costs plusinterest at the utility's short-term borrowing rate.

5. Once such an adjustment mechanism is approved by the commission underthis section, it shall remain in effect until such time as the commissionauthorizes the modification, extension, or discontinuance of the mechanism ina general rate case or complaint proceeding.

6. Any amounts charged under any adjustment mechanism approved by thecommission under this section shall be separately disclosed on each customerbill.

7. The commission may take into account any change in business risk tothe corporation resulting from implementation of the adjustment mechanism insetting the corporation's allowed return in any rate proceeding, in additionto any other changes in business risk experienced by the corporation.

8. In the event the commission lawfully approves an incentive- orperformance-based plan, such plan shall be binding on the commission for theentire term of the plan. This subsection shall not be construed to authorizeor prohibit any incentive- or performance-based plan.

9. Prior to August 28, 2005, the commission shall have the authority topromulgate rules under the provisions of chapter 536, RSMo, as it deemsnecessary, to govern the structure, content and operation of such rateadjustments, and the procedure for the submission, frequency, examination,hearing and approval of such rate adjustments. Such rules shall bepromulgated no later than one hundred fifty days after the initiation of suchrulemaking proceeding. Any electrical, gas, or water corporation may applyfor any adjustment mechanism under this section whether or not the commissionhas promulgated any such rules.

10. Nothing contained in this section shall be construed as affectingany existing adjustment mechanism, rate schedule, tariff, incentive plan, orother ratemaking mechanism currently approved and in effect.

11. Each of the provisions of this section is severable. In the eventany provision or subsection of this section is deemed unlawful, all remainingprovisions shall remain in effect.

12. The provisions of this section shall take effect on January 1, 2006,and the commission shall have previously promulgated rules to implement theapplication process for any rate adjustment mechanism under this section priorto the commission issuing an order for any rate adjustment.

13. The public service commission shall appoint a task force, consistingof all interested parties, to study and make recommendations on the costrecovery and implementation of conservation and weatherization programs forelectrical and gas corporations.