FINNEGAN, CONRAD & PETERSON L.C.

Missouri Governor's Energy Policy Task Force Recommends Diversion of Refunds, Drafts Legislation

Some will recall the ill-fated effort by MGE to divert a small Williams sales gas refund to low income customers rather than to system supply customers as a whole. In that case the Commission ruled that there was no statutory authorization to create a subclass of low income residential ratepayers and it refused (taking some political heat) to grant the relief requested. Some might have thought the matter ended, but that was not so

Earlier this year Missouri Governor Holden established a "Natural Gas Task Force" to review issues connected with the high price of natural gas last winter. That Task Force has now released its report which among other things states that Chapter 393 should be amended to give the PSC "greater authority" to allocate refunds among ratepayers. Amendatory legislation was also drafted. 

Refunds of overcharges, whether they be of natural gas costs, transportation charges or penalties belong to the customers who originally paid them.  It is not appropriate to "refund" A's money by paying it to B.

In recent years, with the exception of the ad valorem and Tight Sands refunds, have been small and related to sales gas purchases or deliveries. Natural gas transporters should not seek to obtain refunds that belong to other customers or customer groups. However, refunds of charges that pertain to prior periods when larger customers were sales customers may need closer analysis. The proposed legislation is quite broad and presents risks that overcharges will not be returned to those who paid them.

Many suggest that low income customers' problems in paying for utility service are a societal problem and not properly the responsibility of the public utility regulatory framework.  Regulation is intended to serve as a substitute for competition and should result in cost-based rates.  Customer inability to pay does not affect the cost of providing the service.