On the eve of the Missouri Legislature’s last day in session this year, state lawmakers on May 13 gave near-unanimous consent to an energy transition financing bill heralded by utilities and renewable energy advocates as a way to keep costs in check as the state replaces aging coal-fired power plants with wind, solar and battery storage facilities.
If signed into law by Gov. Michael Parson, House Bill 734 would authorize investor-owned utilities to apply to the Missouri Public Service Commission to finance “energy transition costs” through the issuance of securitized utility tariff bonds. The pricing of the securitization would need to lower present costs to customers, and regulators would need to issue a financing order requiring a reduction in rates to offset the revenue requirements associated with assets being financed, according to a legislative analysis of the bill.
A similar financing measure became law in Kansas in April, allowing electric and natural gas utilities to securitize certain “qualified extraordinary costs,” such as costs related to extreme storms, while California regulators in April said Pacific Gas and Electric Co. could issue a ratepayer-neutral securitization to cover $7.5 billion in costs related to catastrophic 2017 wildfires, though ratepayer advocates are challenging that decision.
Evergy Inc., which operates electric utilities in Kansas and Missouri, supported the Missouri bill “because it is a tool that will allow us to reduce the cost of retiring power plants that have reached the end of their useful life, which can minimize cost impact on customers,” a utility spokesperson said in a May 14 email. Speaking with investment analysts during a May 6 earnings call, Evergy President and CEO David Campbell applauded the measure as “a mechanism to collaborate with our regulators on the process of removing coal from rate base and replacing that rate base with renewables.”
Evergy’s integrated resource plan calls for the addition of 4,200 MW of renewable resources and retirement of more than 2,000 MW of fossil-based generation by 2032, though the utility has not yet determined whether it will request securitization as those plants retire, according to the spokesperson.