Lawmakers may repeal part of new utility law

Wednesday, January 11, 2006

JEFFERSON CITY, Mo. -- Senators proposed Tuesday to repeal a new law that could allow natural gas companies to raise their rates to offset revenue losses resulting from conservation-conscious consumers.

The provision was part of wide-ranging utility legislation that received lopsided approval last year and was signed into law by Gov. Matt Blunt.

But since then, criticism has grown over the provision allowing gas companies to try to recoup their revenue when customers use less gas than expected -- either because of warmer weather or because of conservation efforts such as turning down the thermostat, installing efficient furnaces and adding insulation to their homes.

The provision took effect Jan. 1, but has had no practical impact yet because the Missouri Public Service Commission has not adopted rules implementing the law. Once rules are adopted, a utility still would have to apply for the rate-adjusting privilege as part of regular PSC review.

Democratic Attorney General Jay Nixon has raised concerns about the provision. So has PSC chairman Jeff Davis, a Republican, who has said consumers should be able to keep everything they save through conservation efforts.

Sen. John Griesheimer, the lead sponsor of last year's bill, said Tuesday that the language allowing rate increases to offset conservation-related revenue shortfalls had become so "politicized" that he now supports repealing it.

"Rather than continue to get pounded on it, I think there will be a bill filed to just take that word 'conservation' out" of the law, said Griesheimer, R-Washington.

His comments came the same day that Senate Democrats filed a bill to repeal the entire section -- disallowing rate adjustments because of changes in gas usage based on weather and conservation efforts.

Lead sponsor Sen. Pat Dougherty, D-St. Louis, said the provision "basically slaps consumers in the face for doing the right thing."

The provision has gained attention partly because of this winter's high natural gas prices, which have led many consumers -- Dougherty included -- to cut back on natural gas use by turning down the thermostats in their homes.

Most of a customer's natural gas bill is based on the wholesale price of gas, which is not regulated by the PSC. But the bill also includes charges to account for the utility's fixed costs of providing service -- things such as meters and service lines.

Some of those operating costs are included in a flat monthly charge, but some are recouped through a charge linked to the volume of natural gas used by customers. If customers use more gas than regulators expected when setting the rate, then a gas company receives more money than expected. But if customers use less gas than projected, then the gas company receives less. The new law was drafted to apply to either scenario.

Blunt said Tuesday he's not convinced the provision does what has been suggested by critics and continues to believe the general bill was good public policy.

But, Blunt said, "we're going to continue to study the impact. If indeed somebody were to demonstrate some harmful impact to Missouri families, then clearly we would want to address that."

Dougherty's bill is SB829.

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