The Missouri Senate approved a bill Monday that revises key aspects of utility rates, including allowing utility companies to seek rate increases based on projected rather than actual costs.
The bill, which passed with a vote of 22-11, allows companies to seek rate increases for natural gas units that are currently under construction. It also allows Missourians to opt out of using smart meters, among other things.
For utility companies, a test year is a 12-month period used to determine future service costs. Missouri utility companies currently use a historical test year to determine future rates, basing them on expenses, investments, and sales from the previous 12 months.
Senate Bill 4 allows gas, water, and sewage utility companies to base rate requests on projected expenses and revenue in future test years. According to the bill, the Public Service Commission has the authority to prohibit a company from using future test years if it is deemed harmful to the public interest.
The bill was opposed by both Democrats and Republicans, who held up the final vote for several hours to express concerns that it was rushed through the legislature and would result in significant utility rate increases.
“I haven’t found anybody that knows everything about this bill,” said Sen. Joe Nicola, R-Grain Valley, who voted against it. “I wish we’d have taken a little more time, maybe even had some town halls across the state and press conferences, so that we can explain to the people what the problem is.”
The Senate did not pass an emergency clause, which would have made the bill effective immediately if it were passed.
The bill is now headed to the Missouri House for further debate.
