Spire Inc. is pushing for regulatory reform in Missouri that would modernize the state's approach to utility oversight, company officials said during a Feb. 1 earnings call.
Pointing to a state Senate report, Spire President and CEO Suzanne Sitherwood said legislators have recently recognized that the Missouri is lagging behind other states in its regulatory model. The report said that the Missouri Public Service Commission should be able to adapt to a changing utility environment and evolving consumer demands.
The state's utilities have to rely on unpredictable customer usage levels for revenue, and utilities' cost recovery in Missouri is not as predictable, adaptable or attractive as in other jurisdictions, the state Senate report found.
Against that background, Spire has been supporting efforts both in the state legislature and at the Missouri PSC to change how the state oversees utilities, Sitherwood noted. There has been some movement there towards more progressive ratemaking tacks that would reduce regulatory lag, encourage infrastructure investment and allow for performance-based ratemaking that aligns incentives with outcomes.
"We will continue to stay involved and look forward to working with Missouri's leadership, including Governor Greitens, legislative leadership and the Public Service Commission," Sitherwood said during the call. "Overall, we are encouraged by the broad-based momentum coming out of the elections and the combined efforts by the Senate and Commission to study the regulatory challenges. By coming together to address the need for change in the regulatory process, we believe all Missourians are much better positioned this year for positive change."
She also noted that positive developments in the regulatory arena also bode well for investors. The market tends to favor utilities in states with constructive regulatory frameworks that allow for competitive cost of capital and other key metrics.
Spire's financial results for the quarter ended Dec. 31, 2016, reflected some of the regulatory issues that Sitherwood had referenced. Spire's earnings were impacted by the mild winter weather and the timing and variability of that weather, the company said.
Other government actions are also on Spire's radar but will likely be less impactful, company officials said. Spire does not expect that President Donald Trump's plan to change the tax code for corporations will change the spending habits for regulated utilities.
"The Trump plan is anticipated to be largely neutral to Spire earnings, reflecting the fact that a majority of our earnings are at the utility level where the rate change is mitigated," Steve Rasche, Spire's executive vice president and CFO, said during the call. "We do not anticipate any change in our capital spending plans over the next several years as a result of tax reform, and we will evaluate opportunities to accelerate those plans as the tax picture becomes clearer."
Spire is also still moving forward with its planned transmission pipeline project, a 400,000 Dth/d pipe that would draw gas from the Rockies Express Pipeline LLC system to serve customers in St. Louis and other eastern Missouri areas.
Having filed a certificate application with FERC in January, Spire expects the project will be in service during fiscal year 2019. Sitherwood said the company does not expect that the recent dip in FERC commissioner numbers, leaving the commission without a quorum and therefore unable to formalize many key decisions, will inhibit the St. Louis pipeline project.
"The staff is the one that manages the process and the process then goes into a recommendation right before the in-service date to the commission," Sitherwood said. "The staff is there and working as they normally do. We do not see any interruption at all. We've looked at that, and that is our determination."
Spire reported 2017 fiscal first-quarter net economic earnings of $47.5 million, or $1.04 per share, remaining relatively flat compared to the prior-year quarter's $45.1 million, or $1.04 per share.