Citing a new state law, two of Missouri's largest utilities are seeking state permission to impose surcharges on customer bills to pay for the replacement of old water mains and the relocation of natural gas pipelines, according to a report by David A. Lieb of The Associated Press.
About 335,000 St. Louis County customers of Missouri American Water could see rate increases on their January bills, if the state Public Service Commission approves.
About 500,000 customers of Missouri Gas could see rate increases on their April bills, pending the PSC's decision.
The state Public Service Commission is hearing testimony this week on proposed rules for the new surcharges, including how they should be listed on bills and what type of notice customers should receive.
Before the new law took effect, utilities had to ask the PSC to undertake a complete review of their costs and revenues, called a "rate case," if they wanted to charge customers for infrastructure improvements.
The new law allows certain utilities make a special request for infrastructure surcharges, which the PSC must act upon within 120 days. Utilities must go through a comprehensive rate case only if they wish to continue the surcharges longer than three years.
Although the new system could result in customers seeing more frequent increases in their bills, utility spokesmen contend it also would save customers money in the long-run, by avoiding the regulatory and legal costs associated with full-scale rate reviews.
Plus, "it will really ramp up the process to replace those old (water) mains much quicker and improve service, reliability and fire protection," Tony Paraino, a spokesman for Missouri American Water, told Lieb.
The amount of the water company's proposed surcharge could vary by customer and by month depending on how much water is used, the PSC said.
Missouri Gas Energy is proposing a flat 58 cent monthly surcharge on customer bills. Spokesman Paul Snider said that would help recoup the $24 million spent on government-mandated natural gas line replacements over the past three years.
Both utilities plan to insert materials in their customers' bills explaining the higher charges.
Among the items being considered as part of the PSC's rule-making process is whether the surcharge should be shown separately on bills or just rolled into the basic rate.