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In re Verified Application and Petition of Liberty Energy (Midstates) Corp

Court of Appeals of Missouri, Western District, First Division

July 29, 2014

IN THE MATTER OF THE VERIFIED APPLICATION and PETITION OF LIBERTY ENERGY (MIDSTATES) CORP d/b/a LIBERTY UTILITIES TO CHANGE ITS INFRASTRUCTURE SYSTEM REPLACEMENT SURCHARGE, MISSOURI PUBLIC SERVICE COMMISSION, Respondents,
v.
THE OFFICE OF PUBLIC COUNSEL, Appellant.

APPEAL FROM THE PUBLIC SERVICE COMMISSION

Before Mark D. Pfeiffer, Presiding Judge, Lisa White Hardwick and Gary D. Witt, Judges

Lisa White Hardwick, Judge

The Office of the Public Counsel appeals from the Missouri Public Service Commission's order approving the request of Liberty Energy (Midstates) Corp. d/b/a/ Liberty Utilities ("Liberty") to change its Infrastructure System Replacement Surcharge ("ISRS"). Public Counsel contends the Commission's order is unlawful because it allows Liberty to recover costs that are not authorized by the ISRS statutes. For reasons explained herein, we affirm.

Factual and Procedural History

The Commission is the state administrative agency responsible for regulating public utilities, including gas corporations, in Missouri. In re Laclede Gas Co., 417 S.W.3d 815, 817 (Mo. App. 2014). Liberty is a Missouri corporation and a natural gas provider. It is a "gas corporation" and "public utility" under Sections 386.020(18) and (43), RSMo Cum. Supp. 2013, [1] and, therefore, is subject to the Commission's regulatory power. Id. Public Counsel is a state agency that has the discretion to represent the interests of consumers in all utility proceedings before the Commission and in all appeals of Commission orders. Id.

In 2012, Liberty purchased substantially all of the assets that Atmos Energy Corporation ("Atmos") used to provide natural gas and transportation services in Missouri. The Commission issued new certificates of convenience and necessity to Liberty for the service areas formerly served by Atmos, and the Commission approved Liberty's adoption of Atmos's tariffs.

Among the tariffs that Liberty adopted were Atmos's ISRS tariffs for each of its three rate districts. The ISRS statutes, Sections 393.1009, 393.1012, and 393.1015, provide a method for gas corporations to recover eligible infrastructure system replacement costs between general rate cases through a surcharge on their customers' bills. Section 393.1009(3) defines "eligible infrastructure system replacements" as gas utility plant projects that:

(a) Do not increase revenues by directly connecting the infrastructure replacement to new customers;
(b) Are in service and used and useful;
(c) Were not included in the gas corporation's rate base in its most recent general rate case; and
(d) Replace or extend the useful life of an existing infrastructure[.] Section 393.1009(5) defines "gas utility plant projects, " in pertinent part, as:
(a) Mains, valves, service lines, regulator stations, vaults, and other pipeline system components installed to comply with state or federal safety requirements as replacements for existing facilities that have worn out or are in deteriorated condition;
(b) Main relining projects, service line insertion projects, joint encapsulation projects, and other similar projects extending the useful life or enhancing the integrity of pipeline system components undertaken ...

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