Spire rate case could signal change in precedent at PSC

JEFFERSON CITY, Mo. – Over the last 30 years, dating back to their days as Laclede Gas, Spire hasn’t litigated a rate case. However, after the Public Service Commission staff and Office of Public Counsel refused to settle on most all of the normally agreed to issues, leading to weeklong hearings in front of the commission. Many are seeing the treatment of Spire and the lengthy hearing process as a change in precedent towards more regulation by commission staff.

While the larger rate cases are typically scheduled for several days, the commission hearings during rate cases are held only over the large issues in the case and don’t take the full scheduled time. However, the Spire hearings began with some expecting them to have to rush to be completed by the end of the week after almost no agreement could be reached between the company and state government regulators.

Typically, many of the issues that have to be litigated, like capital structure and pension expense, are settled before the case reaches the commission. Spire has been in the mid-50s on capital structure equity for years. However, PSC staff are now attempting to penalize the business with a reduction to 47 or 48. Other issues include how Spires addresses their pension costs and low price tag issues such as energy efficiency and low-income programs.

Outside of the failure to come to an agreement on the issues at the staff level before the negotiations commenced PSC staff send over 1,400 data requests to Spire. After that unprecedented number of requests, the Office of Public Counsel and PSC staff have made demands to move capital investment to short-term debt in an attempt to lower the utility’s return on equity.

However, perhaps the most contentious debate has been over regulatory lag. Typically, the regulatory lag benefits the ratepayers, however in certain circumstances, if the utility makes unusually successful business decisions it can benefit the utility. The PSC staff is seeking to penalize the company regardless of if their decisions ultimately prove wise or not.

One longtime PSC observer commented that Spire had no financial choice but to push this case to hearings, especially after choosing to keep their headquarters in St. Louis after the acquisition. There has been some speculation that this rate case has become more contentious after the over earnings case filed last year drew criticism after being filed the same week as a bill to change the regulatory process was being heard in the state senate.

Some see the changes in precedent as a surprising move by PSC staff during a time when Governor Greitens called for a statewide effort to reduce regulations and red tape to near universal support. In what could be the first window into his views on utility policy Commissioner Steve Stoll’s term ends next week. Because the commission make-up without Commissioner Stoll would be two Republicans and two Democrats, Greitens could choose a person from either party or nominate Stoll to another term.

The Missouri Times reached out to the PSC’s public information administrator, Kevin Kelly, to inquire about the length of the hearings and received the following response:

“The Spire evidentiary hearing is scheduled for two weeks (December 4-8 and December 11-15). A hearing schedule for a two-week period is not unusual in a major rate case. As an example, the hearing schedule for the upcoming Missouri-American Water Company rate case is February 26-March 2 and March 5-9. In addition, as you know, the Spire case involves both Laclede and MGE.

He directed the Times to the case number to view a full list of issues in the case, which can be viewed here:

The Missouri Times reached out to Spire regarding the case, who responded with the following statement:

“At Spire, our customers depend on us to be good financial stewards and that means avoiding costly rate cases. And when we must come in for a rate case, as we had to this year, we always work to reach an agreement that is in the interest of all parties involved. While we did agree to some items before the hearings, we still have outstanding issues to resolve. We will continue to follow the process set forth by the Public Service Commission until we reach a resolution that ensures we can continue providing the service our customers expect and deserve.”

This story originally appeared on The Missouri Times.