COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. No.:1305S.01I Bill No.:SB 136 Subject:Energy; Public Service Commission; Utilities Type:Original Date:January 30, 2025Bill Summary:This proposal modifies provisions relating to the test year for certain
utilities.
FISCAL SUMMARY
ESTIMATED NET EFFECT ON GENERAL REVENUE FUNDFUND AFFECTEDFY 2026FY 2027FY 2028
General Revenue* ($712,978) ($854,496) ($870,323)
Total Estimated Net
Effect on General
Revenue ($712,978) ($854,496) ($870,323)
* Cost to Department of Commerce and Insurance – Office of Public Council for 4 FTE
(increased need for resources to respond to the changes in utility regulation).
ESTIMATED NET EFFECT ON OTHER STATE FUNDSFUND AFFECTEDFY 2026FY 2027FY 2028Public Service
Commission Fund
(0607)* ($310,820)($363,448)($369,769)
ESTIMATED NET
EFFECT ON
OTHER STATE
FUNDS ($310,820)($363,448)($369,769)
* Cost to the Department of Commerce and Insurance – Public Service Commission for 3 FTE
(increased need for resources to respond to the changes in utility regulation). L.R. No. 1305S.01I
Bill No. SB 136
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ESTIMATED NET EFFECT ON FEDERAL FUNDSFUND AFFECTEDFY 2026FY 2027FY 2028Total Estimated Net
Effect on All Federal
Funds $0$0$0
ESTIMATED NET EFFECT ON FULL TIME EQUIVALENT (FTE)FUND AFFECTEDFY 2026FY 2027FY 2028General Revenue
Fund (OPC)4 FTE4 FTE4 FTE
Public Service
Commission Fund
(PSC) 3 FTE3 FTE 3 FTE
Total Estimated Net
Effect on FTE7 FTE7 FTE 7 FTE
☒ Estimated Net Effect (expenditures or reduced revenues) expected to exceed $250,000 in any
of the three fiscal years after implementation of the act or at full implementation of the act.
☐ Estimated Net Effect (savings or increased revenues) expected to exceed $250,000 in any of
the three fiscal years after implementation of the act or at full implementation of the act.
ESTIMATED NET EFFECT ON LOCAL FUNDSFUND AFFECTEDFY 2026FY 2027FY 2028Local Government$0$0$0 L.R. No. 1305S.01I
Bill No. SB 136
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FISCAL ANALYSIS
ASSUMPTION
Section 393.150 – Test Year for Rate Proceedings for Certain Utilities
Officials from the Department of Commerce and Insurance – Office of Public Council
(OPC) anticipates it would need an increase in resources to respond to these changes in utility
regulation. Requiring the OPC to have the skill set to project future test year costs and expenses
would require additional time and additional skill sets not present at the OPC. OPC anticipates it
would need four additional full-time employees to process these abbreviated cases. The
discipline necessary to process these applications would require, at a minimum, that the OPC
hire two auditors and engineers.
Oversight does not have any information to the contrary. Therefore, Oversight will show the
fiscal impact (4 FTE) as estimated by the OPC to the General Revenue Fund.
Officials from Department of Commerce and Insurance – Public Service Commission (PSC)
will need additional FTE to evaluate the projections used in calculating future test year expenses
and plant. Utilities may apply an index such as the consumer price index or other indices to the
historical costs incurred to predict the future test year costs. Currently Staff reviews historical
costs only. The review of the projections will be an additional scope to Staff’s audit that is not
currently occurring and will take additional man-hours to complete. Staff will not only need to
evaluate the appropriateness of using such an index but will still need to review the historical
costs.
Oversight does not have any information to the contrary. Therefore, Oversight will the show the
fiscal impact (3 FTE) as estimated by the PSC to the Public Service Commission Fund (0607).
Officials from the Morgan County PWSD #2 and the Wayne County PWSD #2 both assume
the proposed legislation will have a fiscal impact but did not provide any additional information.
Officials from the Metropolitan St. Louis Sewer District - 7B Sewer, the South River
Drainage District and the St. Charles County PWSD #2 - 7A Water each assume the
proposal will have no fiscal impact on their respective organizations.
Oversight only reflects the responses received from state agencies and political subdivisions;
however, other local political agencies were requested to respond to this proposed legislation but
did not. A listing of political subdivisions included in the Missouri Legislative Information
System (MOLIS) database is available upon request. L.R. No. 1305S.01I
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Rule Promulgation
Officials from the Joint Committee on Administrative Rules assume this proposal is not
anticipated to cause a fiscal impact beyond its current appropriation.
Officials from the Office of the Secretary of State (SOS) note many bills considered by the
General Assembly include provisions allowing or requiring agencies to submit rules and
regulations to implement the act. The SOS is provided with core funding to handle a certain
amount of normal activity resulting from each year's legislative session. The fiscal impact for
this fiscal note to the SOS for Administrative Rules is less than $5,000. The SOS recognizes that
this is a small amount and does not expect that additional funding would be required to meet
these costs. However, the SOS also recognizes that many such bills may be passed by the
General Assembly in a given year and that collectively the costs may be in excess of what the
office can sustain with its core budget. Therefore, the SOS reserves the right to request funding
for the cost of supporting administrative rules requirements should the need arise based on a
review of the finally approved bills signed by the governor.
FISCAL IMPACT – State GovernmentFY 2026
(10 Mo.)
FY 2027FY 2028GENERAL REVENUE FUNDCost – OPC §393.150 - p. 3 Personal Service($308,333)($377,400)($384,948) Fringe Benefits($176,220)($214,430)($217,455) Equipment and Expense($228,425)($262,666)($267,920)Total Cost – OPC($712,978)($854,496)($870,323) FTE Change – OPC4 FTE4 FTE4 FTEESTIMATED NET EFFECT TO
GENERAL REVENUE FUND ($712,978) ($854,496) ($870,323)
Estimated Net FTE Change to the
General Revenue Fund4 FTE4 FTE4 FTE L.R. No. 1305S.01I
Bill No. SB 136
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FISCAL IMPACT – State GovernmentFY 2026
(10 Mo.)
FY 2027FY 2028PUBLIC SERVICE COMMISSION
(0607)
Costs - PCS §393.150 - p. 3 Personnel Service($175,226)($214,476)($218,766) Fringe Benefits($109,711)($133,338)(135,057) Expense & Equipment($25,883)($15,634)($15,946)Total Costs – PCS($310,820)($363,448)($369,769) FTE Change - PCS3 FTE3 FTE3 FTEESTIMATED NET EFFECT ON
PUBLIC SERVICE COMMISSION
(0607)($310,820)($363,448)($369,769)
Estimated Net FTE Change to the
Public Service Commission Fund3 FTE3 FTE3 FTE
FISCAL IMPACT – Local GovernmentFY 2025
(10 Mo.)
FY 2026FY 2027$0$0$0
FISCAL IMPACT – Small Business
Oversight assumes that small businesses could have a change in utility cost as a result of this
proposal.
FISCAL DESCRIPTION
This bill specifies that beginning July 1, 2026, the test year for rate proceedings, if requested by
certain utilities, will be a future year consisting of the first 12 full calendar months after the
operation of law date for schedules stating new base rates filed by the utilities, unless the Public
Service Commission makes a determination that using a future test year is detrimental to the
public interest. The projected total rate base at the end of the future test year will be used to
establish new base rates, which will not go into effect before the first day of the future test year.
Utilities that elect to use a future test year within 45 days of the end of the future test year will
update their base rates as specified in the bill. The total ending rate base and expense items in the L.R. No. 1305S.01I
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update can not be greater than the total ending rate base and expense items approved by the
Commission in its report and order. The Commission and parties to the case have 60 days to
review the accuracy of the updated information provided by the utility. The Commission must
order the utility to file new tariff sheets reflecting the update, as specified in the bill.
Utilities that request a test year may not recover the costs of any plant investments made during
the test year period under certain mechanisms set out in current law.
For utilities that elected to use a future test year, the utility must provide a reconciliation of the
rate base at the end of the future test year to the Commission within 45 days of the end of the
future test year. If the actual rate base is less than the rate base used to set base rates in the prior
general rate proceeding, the portion of the annual revenue requirement reflecting the rate base
difference must be returned to customers. The difference in revenue requirement will be placed
into a regulatory liability to be returned to customers in the next general rate proceeding with
such regulatory liability to accrue carrying costs at the utility's weighted average cost of capital.
The Commission may consider any change in business risk to the utility resulting from
implementation of the adjustment mechanism when setting the utility's allowed return in any rate
proceeding, in addition to any other changes in business risk experienced by the utility.
For a utility that elected to use a future test year, the utility must provide a reconciliation of
payroll expense, certain employee benefits, and rate case expense at the end of the future test
year to the Commission within 45 days of the end of the future test year. If the actual amounts
are less than the amounts used to calculate the revenue requirement in the prior general rate
proceeding, the difference will be returned to customers. The difference in revenue requirement
will be placed into a regulatory liability to be returned to customers in the next general rate case
with such regulatory liability to accrue carrying costs at the utility’s weighted average cost of
capital.
This legislation is not federally mandated, would not duplicate any other program and would not
require additional capital improvements or rental space.
SOURCES OF INFORMATION
Department of Commerce and Insurance
Office of the Secretary of State
Joint Committee on Administrative Rules
Metropolitan St. Louis Sewer District - 7B Sewer
Morgan County PWSD #2 L.R. No. 1305S.01I
Bill No. SB 136
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South River Drainage District - 7D Levee
St. Charles County PWSD #2 - 7A Water
Wayne County PWSD #2
Julie MorffJessica HarrisDirectorAssistant DirectorJanuary 30, 2025January 30, 2025