Court of Appeals of Missouri, Western District, Second Division
IN THE MATTER OF THE VERIFIED APPLICATION AND PETITION OF LACLEDE GAS COMPANY TO CHANGE ITS INFRASTRUCTURE SYSTEM REPLACEMENT SURCHARGE IN ITS LACLEDE GAS SERVICE TERRITORY; MISSOURI GAS ENERGY; USW LOCAL 11-6; MISSOURI PUBLIC SERVICE COMMISSION, Respondents,
OFFICE OF PUBLIC COUNSEL, Appellant.
from the Public Service Commission
James E. Welsh, Presiding Judge, Cynthia L. Martin, Judge and
Gary D. Witt, Judge.
D. Witt, Judge.
Office of Public Counsel ("OPC") appeals the
Missouri Public Service Commission's
("Commission") order approving the petition of
Laclede Gas Company ("Laclede Gas") to change its
Infrastructure System Replacement Surcharge
("ISRS"). Laclede Gas submitted two ISRS petitions
on August 3, 2015, one for Laclede Gas and one for its
operating unit, Missouri Gas Energy ("MGE"),
(collectively "Laclede"). The petitions contained
proposed rate schedules and supporting documentation for
eligible infrastructure investments for March 1, 2015 through
June 30, 2015. The petitions also contained requests for rate
increases based on estimated expenditures for July and August
2015 with no supporting documentation. The OPC contends that
the Commission's order granting the petitions was
unlawful because it could not award Laclede recovery for the
July and August expenditures because the required
documentation was not provided at the time the petitions were
filed. We affirm.
and Factual Background
is a natural gas provider which operates as Laclede Gas in
Eastern Missouri and MGE in Western Missouri. Both operate as
a "gas corporation" and "public utility"
under section 386.020. Both are subject to the jurisdiction of
the Commission, as provided in Chapters 386 and 393. The
Commission is a state administrative agency responsible for
the regulation of public utilities in Missouri, including gas
corporations, pursuant to sections 386.040 and 386.250(1).
State ex rel. MoGas Pipeline, LLC v. Mo. Pub. Serv.
Comm'n, 366 S.W.3d 493, 496 (Mo. banc 2012). The
Commission has a staff ("Staff") charged with
representing the Commission and state in all Commission
investigations, contested cases, and other proceedings,
unless it timely files a notice of intention not to
participate in proceedings. The OPC is a state agency that,
in its discretion, represents consumers in utility
proceedings before the Commission and in appeals of
Commission orders. Office of Pub. Counsel v. Empire Dist.
Elec. Co., 307 S.W.3d 220, 221 (Mo. App. S.D. 2010);
sections 386.700 and 386.710.
ISRS statutes authorize a method for gas corporations to
recover the cost of certain government-mandated
infrastructure system replacement projects outside of a
general rate case. See sections 393.1009, 393.1012,
393.1015. On August 3, 2015, Laclede filed separate ISRS
petitions for Laclede Gas and MGE seeking to recover certain
infrastructure investments made during the period from March
1 through June 30, 2015, as well as estimated infrastructure
replacement costs through August 31, 2015 (collectively
"Petitions"). The Petitions included necessary
supporting documentation for the work completed through June
30, 2015. The replacement costs for July and August, 2015
were estimates and did not include supporting documentation
for those costs. The July estimated costs were revised and
supported by documentation in a supplemental filing on August
14. The August estimates were revised and supported by
documentation in supplemental filings on September 14 by
Laclede Gas, and September 15 by MGE.
requested a hearing on the ISRS Petitions alleging, inter
alia, that Laclede was not entitled to recover for the
July and August costs because they were not properly
documented at the time the Petitions were filed on August 3,
2015. A hearing was held on October 15, 2015
("Hearing"). Following the Hearing, the Commission
found that the use of estimated costs supported by later
submitted documentation was not a violation of the ISRS
statutes or regulations. The Commission's Staff was able
to fully review the Petitions and determine their validity
prior to its report submission deadline to the Commission.
Finally, the Commission found that OPC failed to make an
effort to seek discovery of any July and August projects or
otherwise challenge those projects and was thus not
prejudiced by any late amendments to the Petitions.
November 12, 2015, the Commission issued its Report and Order
("Report and Order") granting to Laclede Gas and
MGE the requested ISRS tariff changes with some modifications
based on issues raised by the Commission's Staff and OPC.
filed an Application for Rehearing on both Petitions on
November 30, 2015, and the Commission issued its order
denying each on December 16, 2015. This appeal followed.
raises three issues on appeal, all related to the
Commission's inclusion of recovery for the July and
August infrastructure projects in the Petitions.
"This Court reviews the decision of the PSC rather than
that of the circuit court." State ex rel. Praxair,
Inc. v. Missouri Pub. Serv. Comm'n, 344 S.W.3d 178,
184 (Mo. banc 2011). Appellate review of a PSC order is
two-pronged: first, to determine whether the PSC's order
is lawful; and second, to determine whether the PSC's
order is reasonable. [State ex rel. MoGas Pipeline, LLC
v. Mo. Pub. Serv. Comm'n], 366 S.W.3d [493, ]
495-96; see also section 386.510. The appellant
bears the burden of proof to demonstrate that the PSC's
order is unlawful or unreasonable. State ex rel. AG
Processing, Inc. v. Pub. Serv. Comm'n of State, 120
S.W.3d 732, 734 (Mo. banc 2003); section 386.430, RSMo 2000.
The lawfulness of the PSC's order is determined "by
whether statutory authority for its issuance exists, and all
legal issues are reviewed de novo." Office
of Public Counsel v. Missouri Pub. Serv. Comm'n, 409
S.W.3d 371, 375 (Mo. banc 2013) (quoting AG Processing,
Inc., 120 S.W.3d at 734). This Court need not reach the
issue of the reasonableness of the PSC's order if it
finds the order unlawful. MoGas Pipeline, LLC, 366
S.W.3d at 496. The PSC's order is determined to be
reasonable when "the order is supported by substantial,
competent evidence on the whole record; the decision is not
arbitrary or capricious[;] or where the [PSC] has not abused
its discretion." Id. (quoting Praxair,
Inc., 344 S.W.3d at 184).
In Matter of Verified Application & Petition of
Liberty Energy (Midstates) Corp., 464 S.W.3d 520, 523-24
(Mo banc 2015).
first point on appeal alleges that the Commission erred in
approving increases to Laclede's ISRS Petitions because
Laclede failed to comply with the filing requirements of
Section 393.1015 and 4 CSR 240-265(20), rendering the
Commission's judgment both unlawful and unreasonable. We
begin with the question of lawfulness.
claims that the plain language of the ISRS statutes and
applicable regulations require that, at the time an ISRS
petition is filed, the utility supports its petition with all
supporting documentation in final form. Although Laclede
presented supporting documentation for the Petitions, OPC
claimed that because the projects for July and August were
not fully documented, were based upon budgeted amounts at the
time of the filing of the Petitions, and actual costs were
not submitted until later, Laclede was in violation of the
statute and regulations, barring recovery for those two
months. Laclede responded, and the Commission agreed, that
nothing in the statutes or regulations prevents budgeted
information from being used at the time of a petition filing,
updated later with actual costs, so long as an appropriate
review of the ISRS petition is permissible. The Commission
found that "[s]o long as Staff has sufficient time to
perform an effective review of ISRS eligibility within the
sixty days allowed by the ISRS statute, the budgeted July and
August documents, along with actual expense records provided
after the filing of the petitions are acceptable."
Section 393.1015.1(1) requires that:
At the time that a gas corporation files a petition with the
commission seeking to establish or change an ISRS, it shall
submit proposed ISRS rate schedules and its supporting
documentation regarding the calculation of the proposed ISRS
with the petition, and shall serve the office of public
counsel with a copy ...