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HB 3455

Repeals and modifies certain provisions relating to the regulation of public utilities

2026 Regular Session Introduced by Mark Boyko

Missouri HB 3455 tightens CWIP treatment, requires refunds for imprudently incurred or unreasonable pre-operational costs, and limits or removes future test year reconciliations.

Referred: Emerging Issues(H)
#publicservicecommission #utilities
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Bill Summary · HB 3455

Purpose and overall intent

  • Missouri House Bill 3455 (2026) repeals two existing provisions and enacts two new sections related to the regulation of public utilities, with a focus on how construction work in progress (CWIP) and certain rate-making mechanisms are treated in base rate calculations.
  • The measure aims to tighten or modify the treatment of CWIP in rate base and to remove several provisions related to future test years and related reconciliations, updating procedures, and timeframes for base-rate adjustments.

Key provisions and changes

  • CWIP in rate base (Section 393.135)

    • Repeals the current language and replaces it with new provisions.
    • The core concept remains that charges based on costs of construction in progress or other pre-operational costs are generally unjust and unreasonable and prohibited, with limited exceptions.
    • The bill also clarifies that base rate recoveries arising from CWIP included in rate base are subject to refund if costs were imprudently incurred or if project in-service timing is not reasonable. The refund would include interest at the rate used for delinquent taxes (per Rev. & Tax guidance in Missouri).
    • The existing subsection that previously allowed CWIP inclusion for new natural gas-generating units seems to be retained in concept but is rewritten; the detailed operational mechanics are not preserved in full here, as the enacted text emphasizes refunds if costs are imprudently incurred or if in-service timing is unreasonable.

  • Suspension and rate proceeding procedures (Section 393.150)

    • Maintains the Commission’s authority to suspend new schedules, rates, or practices upon filing, with hearings to determine propriety.
    • Allows suspension for up to 120 days beyond the scheduled effective date, extendable to six months if hearings cannot conclude in the initial suspension period.
    • Places the burden of proof on the utility to show that proposed rates are just and reasonable, with preference given to timely decision-making.

  • Future test year and related mechanics (repealed or removed provisions)

    • The bill repeals or significantly narrows several provisions related to:
    • Beginning July 1, 2026: the use of a future test year for rate proceedings.
    • Updating base rates and reconciliations tied to a future test year, including updates to total rate base, depreciation, taxes, payroll, and rate-case expenses at the end of the future test year.
    • The ability to reconcile depreciation, taxes, payroll, employee benefits, and rate-case expenses incurred during a future test year and return the difference to customers through a regulatory liability.
    • The specific mechanisms that allowed recovery of plant investments or the use of reconciliation for rate base at the end of a future test year.
    • Overall effect: reduces or eliminates the option to use future test years and related reconciliations in rate proceedings.

  • Rulemaking and implementation timeline

    • The Commission is required to promulgate rules to implement the revised framework no later than July 1, 2027.
    • Rules would enable meaningful review of updates and reconciliations related to future-test-year scenarios and cost disallowances, under the authority granted by statute and subject to chapter 536 (Administrative Procedure).

Who and what is affected

  • Public utilities regulated by the Missouri Public Service Commission, including gas, electric, water, and sewer corporations.
  • Ratepayers who would receive refunds if CWIP-related costs are imprudent or if in-service timing is deemed unreasonable.
  • Utilities subject to suspension and rate proceedings, with changes to how and when rate updates and reconciliations can occur.
  • Entities involved in rate-setting proceedings, including attorneys, staff, and intervenors, due to changes in procedures, timelines, and the elimination or modification of future test year mechanisms.

Procedural and timeline considerations

  • Repeals and replaces sections 393.135 and 393.150, with new subsections that govern CWIP refunds and suspension procedures.
  • Effective rulemaking deadline: July 1, 2027, for the Commission to promulgate implementing rules.
  • Sunset or expiration provisions related to CWIP in rate base and future test year mechanics are removed or restructured; the bill emphasizes refunds for imprudent or unreasonable CWIP costs rather than long-term CWIP recovery through base rates.
  • The bill maintains expedited hearings for proposed rate changes but tightens oversight by imposing refunds and removing some of the flexibility associated with future test year updates.

Bottom line

HB 3455 reconfigures how CWIP is treated in Missouri utility rate-making by emphasizing refunds for imprudent or unreasonable CWIP costs, restricting or removing the use of future test years and related reconciliations, and strengthening the Commission’s authority to suspend and review new rate schedules. It ushers in a more prescriptive framework for assessing whether pre-operational costs are just and reasonable and directs the timeline for implementing corresponding rules by mid- to late-2027.

Compiled from official sources — confirm details with the bill’s official record.

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