In the Matter of the Application of Laclede Gas Company to Change its Infrastructure System Replacement Surcharge in its Missouri Gas Energy Service Territory In the Matter of the Application of Laclede Gas Company to Change its Infrastructure System Replacement Surcharge in its Laclede Gas Service Territory The Office of Public Counsel Spire Missouri, Inc. v. The Missouri Public Service Commission

Missouri Court of Appeals·Decided November 19, 2019·No. WD82200, WD82297·Published

Opinion

MISSOURI COURT OF APPEALS WESTERN DISTRICT

IN THE M ATTER OF THE ) A PPLICATION OF L ACLEDE G AS ) WD82200 and C OMPANY TO CHANGE ITS ) WD82297 INFRASTRUCTURE SYSTEM ) REPLACEMENT SURCHARGE IN ITS ) O PINION FILED : M ISSOURI G AS E NERGY S ERVICE ) T ERRITORY ; IN THE MATTER OF ) November 19, 2019 THE APPLICATION OF L ECLEDE ) G AS C OMPANY TO CHANGE ITS ) INFRASTRUCTURE SYSTEM ) REPLACEMENT SURCHARGE IN ITS ) L ACLEDE G AS S ERVICE ) T ERRITORY ; THE O FFICE OF ) PUBLIC C OUNSEL ; )

)

Appellant, )

)

S PIRE MISSOURI , INC ., )

)

Appellant, )

v. )

)

T HE MISSOURI P UBLIC S ERVICE ) C OMMISSION , )

)

Respondent. )

APPEAL FROM THE PUBLIC SERVICE COMMISSION

Before Division Two: Thomas H. Newton, Presiding Judge, Anthony Rex Gabbert, and Thomas N. Chapman, Judges

The Office of Public Counsel (OPC) 1 and Spire Missouri, Inc., a gas corporation and public utility, appeal a Public Service Commission 2 determination that it lacked the authority to require that Spire refund, or return to, ratepayers excess infrastructure surcharges 3 related to the company’s 2017 neighborhood-replacement program after this Court found the same surcharges ineligible as to the company’s 2016 infrastructure surcharges, reversing as unlawful a Commission ruling to the contrary. In re Laclede Gas Co. v. Office of Pub. Counsel, 539 S.W.3d 835 (Mo. App. W.D. 2017). 4 Having found the OPC’s request for a ratepayer refund under a 2017 stipulation and agreement moot, the Commission also seeks to dismiss the appeal as moot, arguing that the company’s 2017 general rate cases, which are currently pending before the Missouri Supreme Court, reset Spire’s 2017 surcharges to zero and thus the

1 The Office of Public Counsel (OPC) is the Missouri state agency responsible for representing consumers in cases before the Public Service Commission and on appeals of Commission orders. In re Kansas City Power & Light Co. v. Midwest Energy Consumers' Grp ., 425 S.W.3d 142, 144 n.2 (Mo. App. W.D. 2014) (citing sections 386.700 and 386.710). 2 The Public Service Commission regulates public utilities, such as gas companies, in Missouri under Chapters 386 and 393 of the Missouri Revised Statutes. In re Kansas City Power & Light Co., 425 S.W.3d at 143 n.1. 3 The “infrastructure system replacement surcharge” is commonly referred to as an ISRS. See, e.g., § 393.1015, RSMo (2016). We will refer to it as an infrastructure surcharge to avoid the overuse of acronyms and any resulting confusion. We also refer to the gas company, variously known during the relevant time period as Laclede Gas Co., Missouri Gas Energy, and subsequently Spire Missouri, Inc., as Spire for the reader’s convenience. 4 Spire has an eastern and a western territory in Missouri, and, when Spire has sought a surcharge or a new general base rate, it has done so by bringing two cases, one for each territory. This appeal involves two surcharge cases filed for the company’s infrastructure projec ts in each of its territories in 2017 and analyzes their relation to two general rate cases filed in 2017 —that took effect in 2018—for each of Spire’s territories. No other general rate cases are at issue or discussed. The related appeals argued with this appeal similarly involve two infrastructure -surcharge cases from 2016 (WD82199, WD82299) and two infrastructure-surcharge cases from 2018 (WD82302, WD82373).

excess surcharges are no longer eligible for recovery. We overrule the motion and have considered the matter on the merits. We reverse and remand for further proceedings.

The Commission issued three separate orders following a consolidated hearing in August 2018 intended to allow the parties to introduce evidence on the methodology the Commission would use to determine how to place a value on those components of the neighborhood infrastructure Spire replaced—plastic mains and service lines—and which this Court determined were ineligible for recovery as infrastructure surcharges because the components were not worn out or deteriorated and no obligation had been placed on Spire to replace them by a government-mandated safety requirement. Id. at 840. 5 The consolidated hearing pertained to Spire’s infrastructure surcharges for projects in 2016, 2017, and 2018, each of which arises in different proceedings that are procedurally distinguishable. This appeal focuses on the 2017 cases.

When Spire sought surcharges for its 2017 infrastructure projects, the 2016 surcharge cases were pending before this Court. The OPC opposed some of the 2017 project costs for the same reason that it had opposed costs in the 2016 cases. The parties entered a stipulation and agreement as to the 2017 cases believing

5 Note that section 393.1012.1 permits a gas corporation to petition the Commission to increase its infrastructure surcharge to recover the costs of “certain government -mandated infrastructure replacement projects outside a general ratemaking case.” In re Laclede Gas Co. v. Office of Pub. Counsel, 539 S.W.3d 835, 838 (Mo. App. W.D. 2017) (citation omitted). The infrastructure-surcharge mechanism is more streamlined than a public utility’s general rate proceeding and is of more limited duration. Compare sections 393.1015.2 and .5(2) with section 393.270.

that a court ruling on the matter would be dispositive and that it would not be a productive use of the Commission’s or the parties’ resources “to litigate the Plastics Issue before the Commission again.” 6 Under the agreement, which the Commission approved in April 2017, if this Court reversed the Commission ’s ruling on infrastructure cost-recovery eligibility as unlawful or unreasonable, “then the court’s final decision shall be applied to the [2017 cases] in the same manner as it is applied to the [2016 cases], as applicable.” Spire and Commission staff agreed not to challenge the OPC’s right to request that the Commission determine the amount of the infrastructure-surcharge refund for the 2017 projects under the Court’s ruling, but all signatories agreed “to make any argument they wish regarding the methodology, propriety, and quantification of such refund, if any.” 7 After the Missouri Supreme Court denied transfer in March 2018 and our mandate issued in the 2016 cases, the Commission asked the parties to file recommendations about moving forward with the 2016 cases; the OPC addressed both the 2016 and 2017 cases in a single recommendation given the stipulation

6 During oral argument, the Commission contended that OPC should not have entered a stipulation as to the 2017 infrastructure surcharges that Spire sought, but instead should have allowed the surcharges to be imposed and then litigated the matter to get its challenge properly before this Court. We would not encourage parties to avoid reaching agreements that have the potential to conserve agency and judicial resources. 7 The Commission subsequently approved tariffs for the 2017 infrastructure surcharges of $3,000,749 and $3,044.481 for Spire’s separate territories on Staff’s recommendation in May 2017. According to Staff, the recommended tariffs complied with the unanimous stipulation and agreement of the parties and thus included the costs for replaced plastic mains and service lines later fo und ineligible by this Court with respect to the 2016 cases and due to be refunded under the parties’ agreement in the 2017 cases.

and agreement that related the 2017 cases to the outcome of the court appeal in the 2016 cases.

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In the Matter of the Application of Laclede Gas Company to Change its Infrastructure System Replacement Surcharge in its Missouri Gas Energy Service Territory In the Matter of the Application of Laclede Gas Company to Change its Infrastructure System Replacement Surcharge in its Laclede Gas Service Territory The Office of Public Counsel Spire Missouri, Inc. v. The Missouri Public Service Commission, (Mo. Ct. App. 2019).

In the Matter of the Application of Laclede Gas Company to Change its Infrastructure System Replacement Surcharge in its Missouri Gas Energy Service Territory In the Matter of the Application of Laclede Gas Company to Change its Infrastructure System Replacement Surcharge in its Laclede Gas Service Territory The Office of Public Counsel Spire Missouri, Inc. v. The Missouri Public Service Commission (In the Matter of the Application of Laclede Gas Company to Change its Infrastructure System Replacement Surcharge in its Missouri Gas Energy Service Territory In the Matter of the Application of Laclede Gas Company to Change its Infrastructure System Replacement Surcharge in its Laclede Gas Service Territory The Office of Public Counsel Spire Missouri, Inc. v. The Missouri Public Service Commission) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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