The Missouri Senate has passed a wide-ranging utility bill that would change the way utility rates are set. The legislation from Sen. Mike Cierpiot, R-Lee’s Summit, would allow certain utility companies to use a so-called “future test year” for setting rates based on projected costs and revenues.

A bipartisan group of senators, including Sen. Joe Nicola, R-Grain Valley, is concerned how this will increase monthly rates.

“We do know our rates are going to be going up,” said Nicola. “I’m extremely concerned, once again, because, in my district, I have many elderly people on fixed incomes. I have a list of how many people have lost their homes just because of property taxes, they can’t pay their bills. Their increases aren’t enough, I’m concerned about them. Where are they going to go? How are they going to pay their bills?”

Missouri American Water President Rich Svindland supports the bill, saying that future test year is good for customers because major projects can be completed sooner, which reduces service interruptions.

Another provision would allow utility companies to include so-called construction work in progress for new natural gas-generating units in their rate base. It means that the cost of these projects could be passed on to consumers before the projects are completed, possibly meaning monthly rates could increase.

Cierpiot said that finance charges collected during construction would lower the price moving forward.

“It’s not an exact example, but it’s like having a house payment and you pay an extra payment a year or two and over the period of 30 years you save quite a bit of money,” he said. “That’s what this does is it saves a little bit of money every year because you’ve offset those finance charges early by putting it in the base a little earlier during the construction process.”

Sen. Tracy McCreery, D-Olivette, voted no on the bill over concerns that some utility companies are already asking for a rate increase, separate from this bill, possibly making some monthly rates higher.

“Ameren Electric, Missouri American Water, Empire Electric, Liberty Water and Sewer, Ameren Gas, Evergy West, and Spire – they’re in front of the (Public Service) Commission asking for a total of $1.09 billion dollars,” McCreery said. “So, by passing Senate Bill 4, we’re going to be adding additional rate increases.”

According to the legislation, the so-called “future test year” would be monitored by the Public Service Commission and would evaluate differences between the projected and actual costs.

The bill now goes to the House for more work.

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