Recent Case Outcomes

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On May 17, the General Assembly finished its 2019 legislative session.  MECG was active on several fronts.  MECG actively supported two initiatives.  First, MECG was active in supporting Senator Libla's resolution (SJR25) designed to allow Missouri voters to decide whether to implement electric competition.  Electric markets have been opened to competition, to varying degrees, in 20 different states.  Statistics have shown that rates have increased much slower in states that have introduced electric competition.  Missouri's industrial electric rates have increased 70.2% since 2006.  In contrast, industrial rates in all of the competitive states have increased much slower and some states have actually experienced rate reductions in that time period.  Importantly, as Missouri's industrial rates have become uncompetitive companies and jobs have left Missouri.  Specifically, KCPL admits that, since 2006, it has lost 17% of its industrial customer base.  Second, MECG supported securitization legislation (HB935 and SB289).  This legislation, already implemented in approximately 22 states, provides a mechanism for reducing customer impacts for investment stranded as a result of natural disaster, retail competition or economics.  Relative to Missouri, this mechanism could significant reduce the impact to customers associated with utility retirement of coal plants rendered uneconomic due to low gas costs or the low cost of renewable generation.  While neither piece of legislation passed the General Assembly, each moved further than they did in 2018.

MECG actively opposed legislation introduced by gas and water utilities to radically change the manner in which the Public Service Commission set rates for gas and water utilities.  Gas legislation (SB13) would introduce formula rates.  Recognizing that gas rates have been relatively stable for 10 years, customers are skeptical of the benefits of such legislation.  Water legislation (HB633 and SB377) would greatly expand the scope, both geographically and in terms of the costs included, of the current water ISRS statute.  I have termed this legislation "ISRS on steroids".  Effectively, water utilities would pass more costs through the ISRS without any consideration of offsetting cost decreases or revenue increases.  These utility bills were either withdrawn or failed to pass the House of Senate chambers.

Legislation that passed included bills related to electric vehicle charging stations (declared that non-utility charging stations did not result in those companies becoming public utilities); Commission advisory staff (create a 6 person Commission advisory staff to assist the Commissioners on utility regulation matters);  procedure for appealing Commission decisions and local taxation of wind farms.

On May 1, 2018, KCPL filed for a $26.2 million (4.53%) rate increase.  The rate increase is depressed in that it includes the effects of the reduction in the federal corporate income tax rate.  Absent the reduction in income tax rate, KCPL would be seeking an increase of approximately 9%.  On September 12, the other parties filed testimony in this matter with Staff recommending an increase of only $5.55 million (0.96%).  On October 12, the parties reached a settlement that provides for a rate reduction of $3.9 million (-0.68%).  Furthermore, while the residential class received a reduction of -0.34%, the large commercial and industrial classes received a reduction of -1.00%.  On December 13, the Kansas Commission approved the settlement effective on December 20, 2018.

 On January 30, 2018, GMO filed to increase rates by $19.3 million (2.61%) based upon a return on equity of 9.85%.  GMO proposed to include the lower federal corporate tax rate of 21% , but sought to utilize the tax benefits for the stub period (January 1, 2018 through the effective date of rates) as an offset to alleged under-earnings experienced in 2018.  On September 27, 2018, the parties executed settlements that resolved this case.  Specifically, the parties agreed to a rate reduction of $24 million (3.22%).  This decrease was allocated equally to all rate classes.  The LGS and LP rate decrease was implemented by reducing all energy blocks and leaving demand and customer charges at current levels.  Finally, the stub period tax benefits of $29.3 million were returned to customers through a one-time bill credit.  $6.8 million was credited to the LP rate class and $4.7 million returned to the LGS rate class.  Amounts within the class were credited to customers on the basis of relative energy usage.  On November 26, the Commission approved the settlements with rates to become effective on December 6, 2018. 

On July 1, 2016, Ameren filed to increase rates by $206.4 million (7.8%).  On February 23, 2017, the parties filed a settlement providing for an increase of $92.0 million (3.5%).  Furthermore, in an effort to reduce rate subsidies, residential rates were increased 3.7%, while Large General Service customers received an increase of only 3.0%.  Finally, in order to better align rates with costs, a larger portion of the Large General Service and Large Primary rate increases were collected through demand charges, rather than energy charges.  This benefits higher load factor commercial and industrial customers. 

On February 23, 2016, GMO filed to increase electric rates by $59.3 million (8.17%).  In addition, GMO sought to merge its MPS and Light & Power rate districts.  On September 20, 2016, the parties filed a settlement that provided for an increase of $3.0 million (0.41%).  In addition, the settlement provided for the consolidation of the MPS and L&P rate districts.  In order to mitigate any impacts to customers associated with consolidating the rate districts, the settlement provided for mitigation credits so that no customer would experience an increase in excess of 5.0%.  The rate increase went into effect on February 22, 2017.