HCS HB 1695 -- UTILITY COMPANIES

SPONSOR:  Townley

COMMITTEE ACTION:  Voted "do pass" by the Committee on
Conservation and Natural Resources by a vote of 19 to 0.

This substitute allows the Missouri Public Service Commission to
order a public utility to acquire a small water or sewer
corporation serving fewer than 8,000 customers, if the commission
determines that the corporation has violated statutory or
regulatory standards that affect the safety and adequacy of
service, the corporation has failed to comply with any order of
the Department of Natural Resources or the commission, or it is
unlikely the corporation will provide and maintain safe and
adequate service and facilities in the future.

The commission must consider alternatives to acquisition and must
determine that the public utility is financially, managerially,
and technically capable of operating the corporation so that it
is in compliance with statutory and regulatory standards.  The
commission must also find that rates will not be unreasonably
increased by the public utility after acquisition.

The substitute specifies the alternatives to acquisition that
must be investigated and what must be considered by the
commission when making its decision.

The corporation and the public utility must agree on the
acquisition's price, and the commission must agree that the price
is reasonable.  If an agreement cannot be reached by the parties
or if the commission determines that the price is unreasonable,
the commission will direct the public utility to acquire the
corporation at a price that is equal to the ratemaking rate base,
as determined by the commission.  The burden of establishing the
ratemaking rate base is upon the corporation.

Any public utility that is required to acquire a corporation must
submit to the commission a plan for bringing the corporation into
compliance with statutory and regulatory standards.  The plan is
due within 30 days from the date of acquisition.

The public utility is not liable for damages in excess of
$50,000, with a maximum of $5,000 per incident, nor will it be
subject to any enforcement actions by state or local agencies who
were made aware of the plan, if the damages or basis for the
enforcement action are related to violations committed by the
corporation.

The commission must require the public utility to implement a
rate surcharge that would recover all costs of the acquisition
and necessary improvements to the corporation's system.  The rate
surcharge must be revised quarterly and may recover 100% of the
revenues necessary to provide a net after-tax return on
investment actually made in the acquisition and improvement of
the corporation.

Acquisition proceedings may be initiated by complaints filed by
the commission's staff, the Office of the Public Counsel, or the
mayor, president, or chair of the Board of Aldermen; by a
majority of the council, commission, or other legislative body of
any city, town, village, or county where the alleged unsafe or
inadequate service is provided; or by at least 25 customers of
the corporation.

Current law allows the commission to place sewer or water
corporations with fewer than 1,000 customers into receivership,
if warranted.  The substitute allows the commission to place any
sewer or water corporation into receivership after a hearing,
regardless of its number of customers.

The substitute allows the commission to appoint an interim
receiver in the same order in which it asks the General Counsel
to petition the circuit court for a receiver.  The interim
receiver will have the same authority as a receiver, except he or
she will not be able to liquidate the assets of the utility.

Any receiver or interim receiver is immune from personal
liability for any civil damages resulting from his or her
official capacity.  This immunity does not extend to intentional
conduct or gross negligence.

FISCAL NOTE:  Not available at time of printing.

PROPONENTS:  Supporters say that the bill will help the Missouri
Public Service Commission to act more quickly when small water or
sewer companies are providing sub-standard services.  The
commission can acquire these non-compliant companies and appoint
someone to operate the company to make sure that customers
receive good water and sewer service while it is in litigation.

Testifying for the bill were Representative Luetkemeyer; Missouri
Public Service Commission; and Missouri American Water.

OPPONENTS:  There was no opposition voiced to the committee.

Marc Webb, Legislative Analyst

Missouri House of Representatives
92nd General Assembly, 2nd Regular Session
Last Updated September 23, 2004 at 11:16 am