Bill would allow Missouri water/sewer utilities to file twice-annual rate increases

(The Center Square) — Missouri law requires an 11-month process for water and sewer utilities to submit proposed non-emergency rate hikes, a cycle that can take up to three years of evaluation and hearings before new rates go into effect.

Under a bill heard before the Senate Commerce, Consumer Protection, Energy and the Environment Committee Wednesday, utilities serving more than 8,000 water/sewer customers could request a slight increase every six months through a water and sewer infrastructure rate adjustment (WSIRA) to maintain equipment and recover growing costs.

The panel did not vote on Senate Bill 44, the ‘Missouri Water and Infrastructure Act,’ filed Sen. Bill White, R-Joplin, after the hearing.

“This act is designed to help the water and sewer companies attract private capital and to make efficient infrastructure improvements to Missouri in a safe, reliable and cost-effective manner,” White said. “Unfortunately, it can be difficult for private companies to track capital for water and sewer projects in some parts of Missouri; the reason is a regulatory lag, which is the time it takes between capital investments made and when the company can start paying back the debt to their investors.”

The hearing featured testimony from seven supporters, including Missouri-American Water Co. Director of Government Affairs Christine Page, who said the bill would allow it to implement gradual rate increases rather than large sums all at once on its 470,000 ratepayers statewide.

“Many of our pipes and other critical infrastructure in Missouri are 60 to 100 years old and are nearing — or, quite frankly, have surpassed — their useful expectant life and need to be replaced,” she said. “With a mechanism like this, we could do a filing every six months to recover the eligible projects and investments that we’ve made in the prior six months. You might see $1 or a 50 cent increase — it’s those small incremental increases over that period as opposed to a sudden $6 increase.”

SB 44 was criticized by two speakers, including Midwest Energy Consumers Group (MECG) attorney David Woodsmall, who said the bill is an end-around the regular oversight of the state’s Public Service Commission (PSC) and will lead to higher rates for millions of Missourians.

“Having done this work for 29 years and talked to numerous large customers about this bill, I can tell you this bill is bad for ratepayers, it’s bad for jobs, and it’s bad for Missouri’s economy,” Woodsmall said. “This mechanism bypasses the commission’s review of the utility’s profitability and allows for increases between rate cases without any consideration. The commission can’t do anything as long as they say they’ve done the numbers and are entitled to it.”

White said the three-year interim between regular rate reviews by the PSC means rate changes take years to enact and making investors wary about investing. St. Louis County already implements a similar system, he said.

In an accompanying nine-page fiscal note, the Office of Administration – Facilities Management Design and Construction’s (OA-FMDC) projects if SB 44 is adopted, “the maximum possible increase in water and sewer costs that could occur because of this legislation would be a 15-percent maximum potential increase in water and sewer” rates for ratepayers collectively totaling more than $418,000.

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