EXPLANATION-Matter enclosed in bold-faced brackets [thus] in this bill is not enacted
and is intended to be omitted in the law.
FIRST REGULAR SESSION
SENATE BILL NO. 51
103RD GENERAL ASSEMBLY
INTRODUCED BY SENATOR BLACK.
0967S.01I KRISTINA MARTIN, Secretary
AN ACT
To repeal section 393.1400, RSMo, and to enact in lieu thereof one new section relating to deferrals
by electrical corporations.
Be it enacted by the General Assembly of the State of Missouri, as follows:
Section A. Section 393.1400, RSMo, is repealed and one 1
new section enacted in lieu thereof, to be known as section 2
393.1400, to read as follows:3
393.1400. 1. For purposes of this section, the 1
following terms shall mean: 2
(1) "Commission", the public service commission; 3
(2) "Electrical corporation", the same as defined in 4
section 386.020, but shall not include an electrical 5
corporation as describe d in subsection 2 of section 393.110; 6
(3) "Qualifying electric plant", all rate -base 7
additions, except rate -base additions for new coal -fired 8
generating units, new nuclear generating units, [new natural 9
gas units,] or rate-base additions that incr ease revenues by 10
allowing service to new customer premises; 11
(4) "Rate-base cutoff date", the date rate -base 12
additions are accounted for in a general rate proceeding. 13
In the absence of a commission order that specifies the rate - 14
base cutoff date, such date as reflected in any jointly 15
proposed procedural schedule submitted by the parties in the 16
applicable general rate proceeding, or as otherwise agreed 17
to by such parties, shall be used; 18 SB 51 2
(5) "Weighted average cost of capital", the return on 19
rate base used to determine the revenue requirement in the 20
electrical corporation's most recently completed general 21
rate proceeding; provided, that in the absence of a 22
commission determination of the return on rate base within 23
the three-year period prior to August 28, [2022] 2024, the 24
weighted average cost of capital shall be determined using 25
the electrical corporation's actual capital structure as of 26
December 31, [2021] 2023, excluding short-term debt, the 27
electrical corporation's actual cost of l ong-term debt and 28
preferred stock as of December 31, 2021, and a cost of 29
common equity of nine and one -half percent. 30
2. (1) Notwithstanding any other provision of this 31
chapter to the contrary, electrical corporations shall defer 32
to a regulatory asset [eighty-five] ninety percent of all 33
depreciation expense and return associated with all 34
qualifying electric plant recorded to plant -in-service on 35
the utility's books commencing on or after August 28, 2018, 36
if the electrical corporation has made t he election provided 37
for by subsection 5 of this section by that date, or on the 38
date such election is made if the election is made after 39
August 28, 2018. In each general rate proceeding concluded 40
after August 28, 2018, the balance of the regulatory a sset 41
as of the rate-base cutoff date shall, subject only to the 42
cap provided for in section 393.1655 or section 393.1656, as 43
applicable, be included in the electrical corporation's rate 44
base without any offset, reduction, or adjustment based upon 45
consideration of any other factor, other than as provided 46
for in subdivision (2) of this subsection, with the 47
regulatory asset balance arising from deferrals associated 48
with qualifying electric plant placed in service after the 49
rate-base cutoff date to be included in rate base in the 50 SB 51 3
next general rate proceeding. The expiration of this 51
section shall not affect the continued inclusion in rate 52
base and amortization of regulatory asset balances that 53
arose under this section prior to such expiration. 54
(2) The regulatory asset balances arising under this 55
section shall be adjusted to reflect any prudence 56
disallowances ordered by the commission. The provisions of 57
this section shall not be construed to affect existing law 58
respecting the burdens of pro duction and persuasion in 59
general rate proceedings for rate -base additions. 60
(3) Parts of regulatory asset balances created under 61
this section that are not yet being recovered through rates 62
shall include carrying costs at the electrical corporation 's 63
weighted average cost of capital, plus applicable federal, 64
state, and local income or excise taxes. Regulatory asset 65
balances arising under this section and included in rate 66
base shall be recovered in rates through a twenty -year 67
amortization beginning on the date new rates reflecting such 68
amortization take effect. 69
3. (1) Depreciation expense deferred under this 70
section shall account for all qualifying electric plant 71
placed into service less retirements of plant replaced by 72
such qualifying electric plant. 73
(2) Return deferred under this section shall be 74
determined using the weighted average cost of capital 75
applied to the change in plant -related rate base caused by 76
the qualifying electric plant, plus applicable federal, 77
state, and local income or excise taxes. In determining the 78
return deferred, the electrical corporation shall account 79
for changes in all plant -related accumulated deferred income 80
taxes and changes in accumulated depreciation, excluding 81
retirements. 82 SB 51 4
4. Beginning February 28, 2019, and by each February 83
twenty-eighth thereafter while the electrical corporation is 84
allowed to make the deferrals provided for by subsection 2 85
of this section, electrical corporations that defer 86
depreciation expense and return aut horized under this 87
section shall submit to the commission a five -year capital 88
investment plan setting forth the general categories of 89
capital expenditures the electrical corporation will pursue 90
in furtherance of replacing, modernizing, and securing its 91
infrastructure. The plan shall also include a specific 92
capital investment plan for the first year of the five -year 93
plan consistent with the level of specificity used for 94
annual capital budgeting purposes. For each project in the 95
specific capital investment plan on which construction 96
commences on or after January first of the year in which the 97
plan is submitted, and where the cost of the project is 98
estimated to exceed twenty million dollars, the electrical 99
corporation shall identify all costs and benefits that can 100
be quantitatively evaluated and shall further identify how 101
those costs and benefits are quantified. For any cost or 102
benefit with respect to such a project that the electrical 103
corporation believes cannot be quantitatively evaluated, the 104
electrical corporation shall state the reasons the cost or 105
benefit cannot be quantitatively evaluated, and how the 106
electrical corporation addresses such costs and benefits 107
when reviewing and deciding to pursue such a project. No 108
such project shall be based solely on costs and benefits 109
that the electrical corporation believes cannot be 110
quantitatively evaluated. Any quantification for such a 111
project that does not produce quantified benefits exceeding 112
the costs shall be accompanied by additional justification 113
in support of the project. For each of the first five years 114 SB 51 5
that an electrical corporation is allowed to make the 115
deferrals provided for by subsection 2 of this section, the 116
purchase and installation of smart meters shall constitute 117
no more than six percent of the electrical corporation's 118
total capital expenditures during any given year under the 119
corporation's specific capital investment plan. At least 120
twenty-five percent of the cost of the investments reflected 121
in each year's capital investment plan, which for the 122
purposes of this subsection shall exclude the costs of 123
investments in new generating units and energy storage 124
systems, shall be comprised of grid modernization projects, 125
including but not limited to: 126
(1) Increased use of digital information and controls 127
technology to improve reliability, security, and efficiency 128
of the electric grid; 129
(2) Dynamic optimization of grid operations and 130
resources, with full cybersecurity; 131
(3) Deployment and integration o f distributed 132
resources and generation, including renewable resources; 133
(4) Development and incorporation of demand response, 134
demand-side resources, and energy -efficiency resources; 135
(5) Deployment of smart technologies (real -time, 136
automated, interactive technologies that optimize the 137
physical operation of appliances and consumer devices) for 138
metering, communications, concerning grid operations and 139
status, and distribution automation; 140
(6) Integration of smart appliances and devices; 141
(7) Deployment and integration of advanced electricity 142
storage and peak-shaving technologies, including plug -in 143
electric and hybrid electric vehicles, and thermal storage 144
air conditioning; 145 SB 51 6
(8) Provision of timely information and control 146
options to consumer; 147
(9) Development of standards for communication and 148
interoperability of appliances and equipment connected to 149
the electric grid, including the infrastructure serving the 150
grid; and 151
(10) Identification and lowering of unreasonab le or 152
unnecessary barriers to adoption of smart grid technologies, 153
practices, and services. 154
Project specific information need not be included for the 155
five-year period covered by the plan. Within thirty days of 156
the filing of any capital investment plan or annual update 157
to an existing plan, the electrical corporation shall host a 158
public stakeholder meeting to answer questions and receive 159
feedback about the plan. After feedback is received, the 160
electrical corporation shall file a notice with the 161
commission of any modifications to the capital investment 162
plan it has accepted. Changes to the plan, its 163
implementation, or the level of investments made shall not 164
constitute evidence of imprudence of the investments made 165
under such plan. The submission of a capital investment 166
plan under this section shall not affect in any way the 167
commission's authority with respect to the grant or denial 168
of a certificate of convenience and necessity under section 169
393.170. By February twenty-eighth following each y ear in 170
which the electrical corporation submits a capital 171
investment plan, the electrical corporation shall submit a 172
report to the commission detailing actual capital 173
investments made the previous year, the quantitatively 174
evaluated benefits and costs generated by each of those 175 SB 51 7
investments that exceeded twenty million dollars, and any 176
efficiencies achieved as a result of those investments. 177
5. This section shall only apply to any electrical 178
corporation that has filed a notice with the commission of 179
the electrical corporation's election to make the deferrals 180
for which this section provides. An electrical corporation 181
may provide notice to the commission one time under this 182
subsection if such corporation has applied to the commission 183
under subsection 2 of section 386.266, provided the 184
corporation shall not concurrently utilize deferrals under 185
this subsection and the electric rate adjustments set forth 186
in subsection 3 of section 386.266. An electrical 187
corporation's election shall allow it t o make the deferrals 188
provided for by subsection 2 of this section until December 189
31, [2028] 2035. Notwithstanding the immediately preceding 190
sentence, an electrical corporation may seek permission to 191
continue to make the deferrals provided for by subse ction 2 192
of this section for an additional five years beyond December 193
31, [2028] 2035, by filing an application with the 194
commission seeking such permission by December 31, [2026] 195
2033, which application shall be ruled upon by the 196
commission within one hundred eighty days after its filing. 197
In deciding whether to grant such permission to continue the 198
commission shall have the authority, consistent with its 199
statutory authority outside this section, to consider such 200
factors as in its judgment it deems necessary and may 201
condition the permission on factors that are relevant to the 202
deferrals authorized by subsection 2 of this section. The 203
commission shall make the determination of whether to grant 204
such permission to continue after a hearing. An electrical 205
corporation making deferrals provided for by subsection 2 of 206
this section on and after January 1, 2024, shall be subject 207 SB 51 8
to the revenue requirement impact cap set forth under 208
section 393.1656. Failure to obtain such commission 209
permission to continue shall not affect deferrals made 210
through the date for which permission has been granted, or 211
the regulatory and ratemaking treatment of the regulatory 212
assets arising from such deferrals as provided for by this 213
section. 214
6. The commission may t ake into account any change in 215
business risk to the corporation resulting from 216
implementation of the deferrals in setting the corporation's 217
allowed return in any rate proceeding, in addition to any 218
other changes in business risk experienced by the 219
corporation. 220
7. This section shall expire on December 31, [2033] 221
2040, except that the amortization of the regulatory asset 222
balances arising under this section shall continue to be 223
reflected in the electrical corporation's rates and 224
remaining regulatory asset balances shall be included in the 225
electrical corporation's rate base consistent with the 226
ratemaking treatment and amortization previously approved by 227
the commission pursuant to this section. 228