Missouri power companies would track costs for operations and maintenance for their next rate case under proposed state legislation.
The tracker would be used to compare the difference between the costs factored into electric rates and the expenses the power company incurs. The differences would be included in the calculation for electric rates when the utility files its next case with the Public Service Commission.
Lawmakers this year have been debating changes to the regulation of investor-owned electric utilities. The tracker is part of a proposal that also would allow power companies to seek approval for an infrastructure surcharge to be levied between formal rate cases. Most of the attention so far has been on the surcharge.
Advocates for consumers are critical of both proposals.
John Coffman, the chief counsel for the Consumers Council of Missouri, said the tracker would gather costs into a bucket for future collection instead of a set allowance for the expenses based upon what the costs reasonably assumed will be. He called the change “radical” and said trackers are “anti-consumer.”
“It’s a type of regulation that removes what I see as the good incentives in the current law to encourage cost-efficient behavior,” said Coffman, who previously was the state public counsel responsible for representing ratepayers before regulators.
Supporters of the legislation said the tracker would boost transparency.
Irl Scissors, the executive director of Missourians for a Balanced Energy Future, said the tracker would show precisely how the utility spends its money. He said that 27 states allow power companies to forecast those types of costs and that the proposal in Missouri is tighter. He said the tracker also would measure savings when the power company trims expenses and called it “hogwash” that the proposal would amount to a blank check.
“The Missouri model is much more transparent, much stricter. It maintains full PSC authority,” Scissors said.
The tracker would not count labor costs for company officers and incentive pay that is based upon company earnings. Regulators could review whether expenses were prudently incurred.
A coalition of investor-owned power companies, including Kansas City Power & Light, was formed to push the utility legislation. At a House Utilities Committee public hearing on the legislation last week, KCP&L’s Paul Snider said the operations and maintenance tracker is important for utilities’ efforts to modernize Missouri’s electric grid and to create jobs.
“This is a key component of the bill that allows companies to continue to invest and have a means to recover those costs,” he said.
The Fair Energy Rate Action Fund, which opposes the bill, estimated the tracker could have added more than $200 million dollars to customer bills during the past five years.