2012 PSC Annual Report - Missouri Public Service Commission

TABLE OF CONTENTSBudget ..................................................................................... 2Commissioner Biographies ........................................... 3-5Organizational Functions ............................................... 8-9Regulatory Activity ............................................................ -2Year-In-Review ...................................................................... 28Rate Cases Decided .......................................................... 29Utility Statistics .................................................................. 3-32Commissioner History ..................................................... 33Photo by Harrison Sweazea

COMMISSIONER BIOGRAPHIESKEVIN GUNNChairmanChairman Kevin Gunn was appointed to the MissouriPublic Service Commission on March 13, 2008, by GovernorMatt Blunt. He was confirmed by the Missouri State Senateon April 10, 2008 and sworn in on April 21, 2008. He wasappointed as chairman by Gov. Jay Nixon on February 10,2011.Prior to his appointment to the Commission, Gunn was anattorney in private law practice in St. Louis with the law firmof Sonnenschein, Nath and Rosenthal.In 2000, Chairman Gunn joined the Gephardt in CongressCommittee, working on the congressional campaign ofDemocratic Leader Richard A. Gephardt. He continuedworking for the committee until 2003. During his tenure,Mr. Gunn also worked on congressional redistricting inMissouri and was appointed by Governor Bob Holden toserve on the Missouri Commission on Reapportionment forthe representative districts.From January 2003 until January 2005, Chairman Gunnwas chief of staff to Rep. Richard Gephardt overseeing allCongressional operations in Washington D.C. and St. Louis.Upon Representative Gephardt’s retirement in January2005, Mr. Gunn formed Gunn Communications LLC. In2005, Chairman Gunn left Gunn Communications LLC tobegin work for several large St. Louis law firms, practicingprimarily in the area of governmental affairs.Chairman Gunn received his Bachelor of Arts in politicalscience from American University in 1992 and earned hisJuris Doctor from St. Louis University School of Law in 1996.While in law school, Gunn worked for the Missouri AttorneyGeneral’s office and interned for Federal District JudgeGeorge F. Gunn (no relation).In 2008, Gunn was awarded an Eisenhower Fellowship.In May 2009, he traveled to Australia to study energyand economic development, carbon pollution reductionschemes, renewable energy targets and carbon capture andsequestration.Also in May 2009, Chairman Gunn was appointed to theNational Association of Regulatory Utility Commissioners(NARUC) Board of Directors and currently serves on theCommittee on International Relations. In September 2009,Chairman Gunn was appointed Co-Chair of the NARUCWashington Action Program and in January 2012, hewas appointed to the NARUC Committee on Electricity.Chairman Gunn is a member of the Executive Committee ofthe Eastern Interconnection States’ Planning Council (EISPC)and the Eastern Interconnection Planning Collaborative(EIPC) and the EIPC Stakeholder Steering Committee (SSC).In February 2012, Chairman Gunn was honored to receivethe Terry Barnich Award on behalf of the Missouri Commissionand Staff for their partnership with Moldova. This new awardwas presented by his colleagues in honor of former IllinoisCommerce Commission Chair Terry Barnich, who was killedin Iraq working to improve their utility infrastructure.Gunn formerly served as the Chairman of the St. ClareHospital Foundation Board. He has also served on theWebster Groves City Council, the St. Louis County FireStandards Commission and the St. Louis Regional Chamberand Growth Association Public Policy Council.Chairman Gunn is married to Amy Collignon Gunn, anattorney, and has two sons Connor and Nathan.TERRY M. JARRETT, CommissionerCommissioner Terry M. Jarrett was appointed by GovernorMatt Blunt to the Missouri Public Service Commission for asix-year term on September 11, 2007. Commissioner Jarrettreceived unanimous Senate confirmation on January 17, 2008.Commissioner Jarrett serves as Chairman of the MissouriUniversal Service Board, which was established on March 31,2002 to help low-income and disabledMissourians receive additionaldiscounts for basic local telephoneservice. He additionally serves, bygubernatorial appointment, on theCommittee on 911 Service Oversight.This committee has a variety ofresponsibilities, including aiding inand collecting information relatingto use of a universal emergencytelephone number, reviewingexisting and proposed legislationand providing recommendations formodel systems in preparing a model911 service plan.SC Annual Report 3

BIOGRAPHIESCommissioner Jarrett is a member of the NationalAssociation of Regulatory Utility Commissioners (NARUC).He serves on the NARUC Board of Directors and is Chairmanof the NARUC Critical Infrastructure Committee, a memberof the NARUC Gas Committee and the NARUC/FERC SmartResponse Collaborative. Commissioner Jarrett is also amember of the NARUC Subcommittee on Clean Coal andCarbon Sequestration and a member of the Energy BarAssociation. Commissioner Jarrett was invited recently andaccepted a position on the Research Advisory Committee(RAC) of the National Regulatory Research Institute (NRRI).He is also a member of the New Mexico State UniversityCenter for Public Utilities Advisory Council. The AdvisoryCouncil assists the Center for Public Utilities in providingeducational and research services to the energy, waterand telecommunications industries, and regulatorycommissions.Prior to his appointment to the PSC, Commissioner Jarrettwas the Presiding Commissioner of the AdministrativeHearing Commission. He formerly served as general counselto Matt Blunt in both the Office of the Governor and theOffice of the Secretary of State.Commissioner Jarrett has practiced law as a privateattorney and served as a judicial law clerk to the HonorableDuane Benton at the Supreme Court of Missouri. A veteran,he served as a Judge Advocate officer in the Army Reservesand Missouri Army National Guard from 2002-2010.Commissioner Jarrett received a B.S. degree from CentralMissouri State University (now the University of CentralMissouri) and a J.D. degree from the University of Missouri-Columbia School of Law. While in law school, he was Editorin-Chiefof the Missouri Law Review. In 2005, Jarrett washonored with the Most Recent Distinguished GraduateAward by the University of Missouri-Columbia, School ofLaw.Commissioner Jarrett is a member of the Cole County Bar,as well as the Missouri Bar where he is active on severalcommittees, including serving as the chair of the MilitaryLaw Committee. He routinely lectures on administrativelaw, military law and other regulatory issues.Commissioner Jarrett and his wife, Joan, live in JeffersonCity. They have four children.ROBERT S. KENNEY, CommissionerCommissioner Robert S. Kenney was appointed to theMissouri Public Service Commission on July 29, 2009 byGovernor Jay Nixon. He was unanimously confirmed by theMissouri State Senate on January 13, 2010.Commissioner Kenney is an active member of theNational Association of Regulatory Utility Commissioners.He serves on the Committee on Energy Resources andthe Environment, the Consumer Affairs Committee, theSubcommittee on Utility Market Place Access, and theInternational Relations Committee. He currently serves asthe President of the Organization of MISO States.Commissioner Kenney has been invited to speak andpresent on a variety of legal and energy related topicsincluding general and emerging issues in regulatory policy,renewable energy standards, smart grid deployment,customer engagement, integrated resource planning,environmental compliance, and market monitoring.Prior to his appointment to the PSC, CommissionerKenney served as Missouri Attorney General Chris Koster’sChief of Staff.As Chief of Staff, Commissioner Kenney was instrumentalin leading the office through the transition process. Hewas responsible for overall management of the AttorneyGeneral’s attorney andnon-attorney employeesin five offices throughoutthe state. CommissionerKenney was alsoresponsible for managingand litigating complexcases involving, amongother things, electionlaw, petition initiatives,and representation ofstatewide elected officials.Commissioner Kenneywas also tasked withmonitoring and advocatingon behalf of legislationaffecting the AttorneyGeneral’s Office. As a partof the executive leadership team, Commissioner Kenneywas responsible for the management and administration ofa $23 million budget. Commissioner Kenney also acted asthe primary contact and liaison with multiple constituenciesincluding the Missouri General Assembly, statewide electedofficials, local/municipal elected officials and leaders, andthe labor, law enforcement, agriculture, minority, and othercommunities.Before working for the Attorney General, CommissionerKenney was a shareholder at the St. Louis law firm PolsinelliShalton Flanigan Suelthaus PC (now Polsinelli Shughart),where he practiced in the commercial and businesslitigation practice group and the product liability practicegroup. He litigated complex cases in state and federalcourts in Missouri, Illinois, and other courts throughout thecountry. Commissioner Kenney chaired Polsinelli’s diversitycommittee and served on the firm’s recruiting committee.Prior to his time in private practice at Polsinelli,Commissioner Kenney was an Assistant Attorney Generalin the Missouri Attorney General’s Office for nearly threeyears, practicing in the Consumer Protection Division. In thatdivision, Commissioner Kenney worked to enforce state andfederal consumer protection laws. Commissioner Kenneyalso served the community by implementing communityeducation and outreach efforts. Commissioner Kenney alsoplayed an instrumental role in the initial implementationand enforcement of Missouri’s Telemarketing No-Call ListLaw.Commissioner Kenney remains actively involved in a hostof civic and bar related activities. Commissioner Kenneyis a member of the Missouri Bar Board of Governors.Commissioner Kenney served as the Co-Chair of the 2009-2010 Missouri Bar Leadership Academy. He is Vice-Chair ofthe Missouri Bar’s Twenty-Second Circuit Judicial Evaluation PSC Annual Report

BIOGRAPHIESCommittee and Vice-Chair of the Missouri Bar’sEnvironmental and Energy Law Committee. CommissionerKenney is a past President of the Mound City Bar Association.Commissioner Kenney has also served as a member of theboard of governors of the Bar Association of MetropolitanSt. Louis, serving as a presidential liaison.Commissioner Kenney has served on the Board ofTrustees for Fontbonne University, the Board of Directorsfor The St. Louis Black Repertory Theater, and the Board ofDirectors for the Portfolio Gallery and Educational Center.Commissioner Kenney is a member of Alpha Phi AlphaFraternity, Inc., Epsilon Lambda Chapter.Commissioner Kenney was selected to receive the St.Louis Business Journal’s 2009 Inclusive Leadership Award.Commissioner Kenney was named to the St. Louis BusinessJournal’s Class of 2009 40 Under 40. He was also recognizedin the 2008 Missouri and Kansas Super Lawyers, as a “RisingStar” in the Business Litigation practice area. CommissionerKenney was also selected to appear in the Fifth and SixthEditions of Who’s Who In Black St. Louis.Commissioner Kenney earned his undergraduate degreein 1994 from Hampton University in Hampton, Virginia. Heearned his law degree in 1998 from Saint Louis UniversitySchool of Law. While in law school, Commissioner Kenneywas an Articles Editor for the Saint Louis University PublicLaw Review. He was also a member of the National MootCourt Team and the Moot Court Board. He is licensedto practice law in Missouri and Illinois (inactive). He is amember of the American Bar Association, the Energy BarAssociation, and the Mound City Bar AssociationCommissioner Kenney is married to Michelle (Oakley)Kenney. They have two children: daughter, Mackenzie; andson, Robert, Jr. They live in the Carondelet neighborhood inthe City of St. Louis, Missouri.Representatives (District 103) and served three consecutiveterms. He served on several committees while in the MissouriHouse and was the chairman of the House Elementary andSecondary Education Committee.In 1998, Commissioner Stoll was elected to the first oftwo, four-year terms to the Missouri Senate. He servedthe 22nd District, which encompassed the northern twothirdsof Jefferson County. During his tenure in the Senate,Commissioner Stoll served on various committees, includingCommerce & Environment, Local Government and EconomicDevelopment, Ways & Means and the Senate AppropriationsCommittee.In 2005, then-Senator Stoll resigned his seat in thelegislature to become the City Administrator of the City ofFestus – his hometown – a position he held for four years.In May of 2009, he was named Director of Administrationfor Jefferson County. He became the first director to serveunder the Home Rule Charter of Jefferson County and heldthat position until taking the oath of office to become aPublic Service Commissioner on December 20, 2011.Commissioner Stoll is involved in the following communityactivities: Member, American Legion Post 253 Member, Knights of Columbus, Council 1230 Member, Board of Managers, Jefferson County FamilyYMCA President, Governor Thomas C. Fletcher House Foundation President, Jefferson County Municipal League Member, Board of the Mid-East Area Agency on Aging(MEAAA)Commissioner Stoll and his wife, Kathy, have four children(Emily Stoll, deceased) and five grandchildren.JEFF DAVIS, CommissionerSTEPHEN M. STOLL, CommissionerStephen M. Stoll was born and raised in Jefferson County,Missouri. He received a Bachelor of Arts degree in politicalscience from the University of Missouri-Columbia in 1970and a Master of Education degree from the University ofMissouri-St. Louis in 1979.After receiving hisundergraduate degree,Commissioner Stoll servedin the U.S. Army, washonorably discharged andworked as a classroomteacher in Jefferson Countyschools. While teachingvarious social studiesclasses for 20 years, hewas elected to the citycouncil in Crystal City from1983-1992.In 1992, CommissionerStoll was elected tothe Missouri House ofJeff Davis was appointedto the Missouri PublicService Commission onApril 30, 2004 and wasnamed Chairman byGovernor Blunt on January10, 2005. CommissionerDavis was re-appointedto a full six-year term inApril 2006. He served aschairman until January 13,2009.Commissioner Davis servedas a member of the MissouriUniversal Service Board, theFinancial Research InstituteAdvisory Board and theNational Association of Regulatory Utility Commissioners(NARUC).He resigned in December 2011.PSC Annual Report 5

KEY PSC PERSONNELCommissionersKevin D. Gunn, Chairman ............. 751-0946Terry M. Jarrett, Commissioner ......... 751-3243Robert S. Kenney, Commissioner ....... 751-4132Stephen M. Stoll, Commissioner ........ 751-4221Administration and Regulatory Policy DivisionWess Henderson, Director ............. 751-7435Beth OettingManager-Human Resources ........... 751-5606Robert Boone, Legislative Coordinator . . . 522-8708John HanauerManager-Information Services ......... 522-2453EFIS Toll-Free Help Desk ......... 1-866-365-0924Kevin KellyPublic Information Administrator ...... 751-9300Gregg OchoaPublic Information Coordinator ........ 522-2760Secretary/General Counsel DivisionSteven Reed, Secretary/General Counsel . . 751-3015Morris WoodruffChief Regulatory Law Judge ........... 751-2849Kim Happy, Manager-Data Center ....... 522-6225Regulatory Review DivisionCherlyn Voss, Director ............... 751-3966Natelle Dietrich, Director of Tariff, Safety,Economic & Engineering Analysis ...... 751-7427Bob Schallenberg, Director of Audits, Accounting &Financial Analysis .................. 751-7162Kevin Thompson, Chief Staff Counsel .... 751-2690John Van EschenManager-Telecommunications ......... 751-5525Lena Mantle, Manager-Energy .......... 751-7520Ron PleusManager-Manufactured Housing ....... 751-7119Manufactured Housing Toll-FreeHotline ..................... 1-800-819-3180Jim Busch, Manager-Water & Sewer ...... 751-7529David MurrayManager-Financial Analysis ........... 751-9160Mark Oligschlaeger, Manager-Auditing . . . 751-7443David SommererManager-Procurement Analysis ........ 751-4356Lisa Kremer, Manager-Engineering &Management Services ............... 751-7441Gay Fred, Manager-Consumer Services . . . 751-3160Consumer Services Toll-FreeHotline ..................... 1-800-392-4211 PSC Annual Report

Virtually every Missouri citizen receives someform of utility service from an investor-ownedpublic utility company.MISSIONThe Missouri Public Service Commission regulates investorownedpublic utilities operating in Missouri. The PSC has thestatutory responsibility for ensuring that customers receiveadequate amounts of safely delivered and reasonably pricedutility services at rates that will provide the companies’shareholders with the opportunity to earn a reasonablereturn on their investment. The PSC must balance a varietyof often competing private interests to ensure the overallpublic interest.Jurisdiction and GoalsThe Missouri Public Service Commission (Commission)was created in 1913 by the Public Service Commission Law,now Chapter 386 of the Missouri Revised Statutes. TheCommission regulates investor-owned electric, natural gas,steam, telephone, and water and sewer utilities. In addition,the Commission regulates the operational safety of the state’srural electric cooperatives and municipally owned naturalgas utilities. The Commission also regulates manufacturersand dealers of manufactured homes and modular units.The Commission oversees service territory issuesinvolving investor-owned electric utilities, rural electriccooperatives, municipally owned electric utilities, investorownedwater and sewer utilities and public water supplydistricts. Under federal law, the Commission acts as amediator and arbitrator of local telephone service disputesregarding interconnection agreements.Virtually every Missouri citizen receives some formof utility service from an investor-owned public utilitycompany. Utility services and infrastructure are essentialto the economy of Missouri. They provide heating andcooling during extreme temperatures. They offer accessto emergency services and vital information systems. Theyprovide safe drinking water and assure the environmentallysound disposal of wastewater. Because utilities fulfillthese essential needs, the Commission must assure theratepaying public that quality services will be available on anondiscriminatory basis at just and reasonable rates.CommissionersThe Commission consists of five Commissioners who areappointed by the governor with the advice and consent ofthe Missouri Senate.The governor designates one member as the chairmanwho serves in that capacity at the pleasure of the governor.Commissioners are appointed to six-year terms. Theseterms are staggered so that no more than two terms expirein any given year.The Commission is both quasi-judicial and quasilegislative.The Commission is responsible for deciding casesbrought before it and for the promulgation of administrativerules and enforcement. Many of the Commission’s actionsor decisions involve hearings of contested cases, which bystatute must be transcribed by a court reporter. Hearingsare held in a trial-like setting using evidentiary standardsunder the Missouri Administrative Procedures Act. TheCommission must render decisions in a timely manner toafford all parties procedural and substantive due process,and comply with statutory time limits.The PSC StaffThe Commission is assisted by a staff of professionalsin the fields of accounting, consumer affairs, economics,engineering, finance, law and management. Duties rangefrom helping individual consumers with complaints toinvestigating multi-million dollar utility rate requests.The staff participates as a party in all cases before theCommission, conducting audits of the books and records ofutilities and making recommendations to the Commissionregarding what type of rate increase, if any, should begranted. Commission staff recommendations, like thosefiled by other parties to a proceeding, are evaluated by theCommissioners in reaching a decision in a complaint caseor rate case. The Commission has established standardsfor safety and quality of service to which companies mustadhere. Routine and special investigations of utilities areconducted by the Commission staff to ensure compliance.Weekly Agenda MeetingsThe Commission holds weekly agenda meetings todiscuss various cases, policies and rulemakings, and toissue its decisions. Those meetings are open to the publicand are webcast on the Commission’s website.PSC Annual Report

ORGANIZATIONAL FUNCTIONSAdministration and RegulatoryPolicy DivisionWess Henderson, DirectorThe Administration and RegulatoryPolicy Division is responsiblefor managing the Public ServiceCommission’s (Commission) humanand fiscal resources. The divisionhas agency-wide responsibilities withunits that are responsible for theannual budget, fiscal services andprocurement, human resources andpayroll. The Regulatory Policy andPublic Information Unit, another unit ofthe division, develops and distributesinformation to the media on agencyactivities, responds to media requests,and provides utility consumer educationmaterials. The Legislative Coordinator, the agency’sprimary contact person with the General Assembly, isalso assigned to this division and assists in responding toconstituent inquiries.Regulatory Review DivisionCherlyn Voss, DirectorThe Director of Regulatory Review supervises andcoordinates a number of PSC staff functions including ratecases, complaints, tariff filings, certificate applications,rulemakings and investigatory dockets. The Tariff, Safety,Economic & Engineering Analysis Department and theAudits, Accounting & Financial Analysis Department are apart of the Regulatory Review Division. The Staff Counsel’sOffice also reports to theRegulatory Review Divisionregarding case related andinvestigatory activities.Secretary/General Counsel DivisionSteve Reed, Secretary/General CounselThe General Counsel is authorized by statute to representthe Commission in all actions and proceedings, whetherarising under the Public Service Commission Law orotherwise. Attorneys in the General Counsel’s Office appearin state and federal trial and appellate courts on behalf of theCommission. The General Counsel also provides legal adviceto the Commission and each Commissioner as requested.When authorized by theCommission, the GeneralCounsel seeks civil penaltiesfrom persons or companiesthat have violated the PublicService Commission Law or theCommission’s regulations ororders. Within the Secretary/General Counsel Division,the Adjudication Departmentis the Commission’s quasijudicialcomponent. A staffof regulatory judges handlescases from their filing untiltheir resolution. The assignedjudge presides over the hearings, rules on objections andmotions, and drafts all orders, as directed by the Commission,for that particular case. The Data Center receives all incomingpleadings and issues all Commission orders.In addition, theData Center maintains and preserves the official case files,tariffs and other official documents of the Commission.8 PSC Annual Report

ORGANIZATIONAL FUNCTIONSNatelle DietrichDirector of Tariff, Safety, Economic& Engineering AnalysisThe Tariff, Safety, Economic & EngineeringAnalysis Department consists of four units: Energy,Telecommunications, Water and Sewer, and ManufacturedHousing. These units support the Commission in meeting itsstatutory responsibilities by providing technical expertise insafety; utility rates, tariffs, rules and regulations; economicanalysis; engineering oversight and investigations; andconstruction inspections. Theseunits accomplish their missionby making recommendationsto the Commission in theform of expert testimony,formal recommendations andpresentations.Robert SchallenbergDirector of Audits, Accounting& Financial AnalysisThe Audits, Accounting & Financial AnalysisDepartment consists of five units which provide expertiseto the Commission in the areas of utility accounting,auditing, engineering, finance, management and naturalgas procurement. Staff members perform audits,examinations, analyses and review the books and recordsof the utilities providing service in Missouri. Theseemployees express their conclusions and findings in theform of expert testimony andrecommendations that arefiled with the Commission.These units are alsoresponsible for investigatingand responding to consumercomplaints and makingrecommendations to theCommission regarding theirresolution.Kevin A. ThompsonChief Staff CounselAttorneys of the Staff Counsel’s Office represent theCommission’s staff in administrative matters before theCommission. The Staff Counsel’s Office also provideslegal advice to the Commission’s staff. The officehouses the Consumer Services Unit, the clearinghousefor all utility consumerinquiries. Consumer Servicesinvestigates and respondsto complaints to ensurecompliance with Commissionrules and utility tariffs. Whena consumer has an issue thatis not satisfactorily resolvedafter an initial contact withthe utility, the consumermay call the PSC consumerhotline (1-800-392-4211) forassistance.PSC Annual Report 9

REGULATORY ACTIVITY25,00020,00022,Missouri Commission orload 2-22Figures uoted as of 9-2-22 2 2215,00010,000,938,995,53,8,3355,000COMPLAINTS,INQUIRIES ANDPUBLICCOMMENTSGENERALUTILITY CASESCOMMISSIONCASES OPENEDCOMMISSIONCASE FILINGSRate Case ExpenseCase No. A-2-33Testimony presented in recent rate cases and escalatingrate case expense requests led the Public Service Commission(Commission) to open a case to consider whether changesshould be made to current rules and practices wherebyregulated utilities generally recover all costs incurredwhen presenting a rate case before the Commission. TheCommission directed staff to investigate whether it isappropriate for shareholders to bear responsibility for aportion of rate case expense, or whether it is appropriateto establish a dollar or revenue percentage cap on rate caseexpense that can be passed on to ratepayers. The file is arepository for anyone wanting to submit informal comments.Tariff Liability LanguageCase No. AO-22-3On December 7, 2011, the Commission opened a casedirecting the staff to investigate tariff provisions addressingliability for damages by surveying provisions currently ineffect, examining other states’ policies on such provisions and PSC Annual Report029DATAREQUESTS ANDRESPONSES929,2TARIFFACTIVITYCOMPANIES’ANNUAL REPORTSUBMISSIONSfiling a report. Staff filed its first report, outlining provisionscurrently in effect, on March 30, 2012. Staff reported thatmost current tariff liability language was reasonable forelectric, natural gas, water and sewer utilities, and anyconcerns were not ripe for discussion in this proceeding.Staff also noted that the liability language it reviewed fortelecommunications companies was egregious. Staff filedits second report, which summarized the policies of otherstates, on August 1, 2012. Staff received information from 31states and found most states have similar liability languageand policies as Missouri. Based on the information gatheredfor both reports, staff recommended the Commissionreview tariff liability language on a case-by-case basis. TheCommission issued another order asking for a third report toexamine jurisdictions that have reduced regulated utilities’immunity from liability for personal and property damage.Investigation into the Establishmentof Low-Income Customer ClassCase Nos. E-23-5,G-23- and -23-On August 8, 2012, the Commission opened aninvestigation into the establishment of a low-incomecustomer class or other means to help make utility serviceaffordable. In its order, the Commission commented thatover the last several utility rate cases, witnesses at local public559

REGULATORY ACTIVITYhearings testified that any rate increase places a heavy anddisproportionate financial burden on low-income residents.The Commission requested comments by September 7 andreply comments by September 24 on ideas to reduce thefinancial burden on low-income customers while providing afair and adequate return to the regulated utilities.Rate Stabilization MechanismCase No. A-23-On September 20, 2012, the Commission opened aninvestigation into the establishment of a rate stabilizationmechanism to reduce the need for frequent rate casefilings. The Commission conducted local public hearingsrelated to pending electric utility rate cases, at whichcustomers expressed concern about the frequency of rateincrease requests. The Commission wants to examinepossible solutions to that problem, but notes the concernsare not limited to electric rates. This working file willserve as a repository for documents and comments. Initialcomments and exhibits regarding proposals are to be filedby November 2, 2012.ELECTRICRate Cases DecidedAmeren MissouriCase No. ER-2-28On September 3, 2010, Ameren Missouri filed an electricrate case with the Commission seeking to increase annualelectric revenues by approximately $263 million. TheCommission granted Ameren Missouri an electric rateincrease of approximately $172 million in an order issued onJuly 13, 2011. As part of its decision, the Commission deniedAmeren Missouri’s request to include, in rate base, any of thecost to rebuild the upper reservoir of the Taum Sauk plant.Electric Rate Cases FiledAmeren MissouriCase No. ER-22-On February 3, 2012, Ameren Missouri filed an electricrate case with the Commission seeking to increase annualelectric revenues by approximately $375.6 million.According to an Ameren Missouri press release, keycomponents of the rate request are: Investments made primarily to improve the reliability ofaging infrastructure and to comply with environmentaland renewable energy regulations. Higher net fuel costs for power plants. Higher costs for the company’s recently proposed energyefficiency programs. (Ameren Missouri says theseprograms are expected to provide approximately $500million in total customer benefits over the next 20 years.) Additional cost increases, including those to meetrenewable energy requirements, material costs andemployee benefits.If approved, new rates will go into effect January 2, 2013.RESIDENTIALAvg.State Revenue StateName cents/h RanIdaho 7.90 1Washington 8.33 2North Dakota 8.56 3Utah 8.97 4Arkansas 9.05 5Kentucky 9.09 7Nebraska 9.30 9Oklahoma 9.51 12Missouri 9.8 5Iowa 10.50 20Kansas 10.63 21U.S. Average.8Illinois 11.81 34Connecticut 18.11 49New York 18.30 50Hawaii 34.68 51COMMERCIALAvg.State Revenue StateName cents/h RanIdaho 6.41 1Washington 7.35 2North Dakota 7.54 3Utah 7.55 4Arkansas 7.58 5Kentucky 7.72 7Nebraska 7.90 9Oklahoma 8.04 12Missouri 8.9 5Tennessee 8.41 16Iowa 8.74 20Kansas 8.79 21Illinois 10.12 34U.S. Average.32New York 15.83 50Hawaii 32.38 51INDUSTRIALAvg.State Revenue StateName cents/h RanIdaho 3.97 1Washington 5.11 2North Dakota 5.16 3Utah 5.21 4Arkansas 5.25 5Kentucky 5.40 7Nebraska 5.51 9Oklahoma 5.95 12Missouri . 5Tennessee 6.18 16Iowa 6.26 20U.S. Average 6.89Illinois 7.12 34Connecticut 13.55 49New York 15.53 50Hawaii 28.40 51Source: U.S. Energy Information Administration - 12 mos.Ending December 2011 - Table 5.6.bPSC Annual Report

REGULATORY ACTIVITYalleged deficiencies and concerns identified by the participantsto this file in its next triennial Integrated Resource Plan”.Missouri Energy Efficiency Investment ActThe Missouri Energy Efficiency Investment Act (MEEIA),393.1075 RSMo Supp. 2010, was passed by the Missourilegislature and signed by Governor Nixon in 2009. Thepurpose of this act was to encourage investor-ownedelectric utilities to develop and implement demand-sidemanagement programs.Rules 1 to implement MEEIA became effective May 30, 2011.As a result of these rules, in December 2011, electric utilitiesbegan making filings requesting approval of demandsideprograms and a demand-side program investmentmechanism (DSIM) to recover demand-side program costs,lost revenues and performance incentives.KCP&L Greater Missouri Operations GMOCase No. EO-22-9On December 22, 2011, GMO filed a MEEIA case with theCommission seeking approval of demand-side programs(including both energy efficiency and demand-side programs),and a DSIM that will include cost recovery of demand-sideprogram costs, a portion of the net shared benefits, lostrevenues and a performance incentive mechanism.Under this proposal, GMO states it would incurapproximately $38.8 million in demand-side program costsover the next three years. GMO anticipates that programs willresult in $105.1 million 2 in total customer benefits (net ofprogram costs) and have a cumulative annual energy savingsof approximately 155 GWh and cumulative annual demandsavings of approximately 73 MW during the third programyear. This case is currently pending before the Commission.Ameren MissouriCase No. EO-22-2On January 20, 2012, Ameren Missouri filed a MEEIA casewith the Commission seeking approval of a broad portfolioof energy efficiency programs, a Technical Resource Manual(TRM) and a DSIM. The proposed DSIM included costrecovery mechanism(s) for program costs, lost revenuesand performance incentives.The Commission approved an agreement on August 1,2012, which included approximately $147 million in energyefficiency program costs over the next three years. The newenergy efficiency programs are expected to be implementedon January 2, 2013. The programs are anticipated to resultin $336.6 million 3 in total customer benefits (net of programcosts) and have a cumulative annual energy savings ofapproximately 793 GWh during the third program year.Federal Environmental RegulationsCase No. E-22-65On August 30, 2011, the Commission opened aninvestigation into the cost of complying with federalenvironmental regulations, directing the Commission staffto lead a working group and draft a report describing theeffects of federal regulations on Missouri’s electric industry.Staff held workshops and sought input from stakeholdersand on May 1, 2012, filed a report on the cost of compliancewith federal environmental regulations. Staff’s analysisindicates the overall cost to Missouri electric utilities andpotentially its customers would be in an approximate rangeof $1.98 billion to $3.276 billion.Renewable Energy StandardsCase No. E-22-255The Commission’s renewable energy standards rules (4CSR 240-20.100 and 4 CSR 240-3.156) took effect on May30, 2011. The Commission opened a case to “draw on theexperience gained regarding the operation of those rulesto consider ways in which the rules might be improved.” Aworkshop discussing those rules was held on April 17, 2012.Cybersecurity PracticesCase No. E-23-On July 17, 2012, the Commission issued an orderrequesting information to address effective cybersecuritypractices for protecting essential electric utilityinfrastructure. In its order, the Commission noted, “Theelectric power industry is increasingly incorporatinginformation technology (IT) systems and networks intoits existing infrastructure as part of nationwide efforts –commonly referred to as the “smart grid,” which is aimedat improving reliability and efficiency and facilitating theuse of alternative energy sources such as wind and solar.”The Commission further noted that, “[I]ncreased relianceon IT systems and networks also exposes the grid tocybersecurity vulnerabilities, which can be exploited byattackers.”The Commission directed regulated electric utilitiesto answer a series of 47 questions related to planning,standards, procurement practices, personnel and policiesand systems and operations by August 31, 2012. Onceanswers are received, the Commission will determine howto proceed.1MEEIA rules include 4 CSR 240-3.163, 4 CSR 240-3.164, 4 CSR 240-20.093,and 4 CSR 240-20.094.2NPV of 15 years at 6.95%3NPV of 20 years at 6.95%PSC Annual Report 3

REGULATORY ACTIVITYAmerican Recovery andReinvestment Act of 29 ARRAThe Commission continued to utilize its $900,000 ARRAgrant to help facilitate analysis and consideration of ARRAelectricity-related topical areas such as: renewable energy,energy efficiency, demand response, energy storage, SmartGrid, plug-in hybrid electric vehicles, coal and carboncapture and storage, transmission and distribution.ARRA funding was utilized for a full-time engineer anda policy analyst to work on such projects. The grant alsoprovides funding for existing Commission staff travel andtraining related to the ARRA topical areas. Using ARRA funds,the Commission was able to provide on-site training relatedto the modified rate design aspects of the Missouri EnergyEfficiency Investment Act and general transmission topics.Federal Activity in ElectricSouthwest Power Pool SPPIn the 2012 fiscal year, the Southwest Power Pool (SPP)conducted studies to determine which transmissionupgrades would likely be needed in 10 years under theIntegrated Transmission Planning (“ITP10”) strategy.The Missouri Public Service Commission (Commission)was very involved in the “ITP10” planning process: assistingin the identification of transmission system needs in10 years and determining how the costs and benefits ofproposed projects would be estimated, costs allocatedamong the utilities in the SPP region and recovered fromtransmission customers.The final ITP10 report was approved by the SPP Board ofDirectors on January 31, 2012 and contained two projectslocated within Missouri. While none of the $1.5 billionprojects identified in the “ITP10” report are currently beingconstructed, the Commission expressed concern that theprojects identified were not creating sufficient benefits forMissouri ratepayers relative to the costs Missouri ratepayerswould owe for the projects.The Commission is involved in ongoing discussionswith SPP and SPP stakeholders addressing how to ensureMissouri ratepayers will receive benefits commensurate tothe costs of SPP board-approved projects for which they willbe required to pay.Also, Commission staff attends and participates in SPPProject Cost Working Group meetings to ensure projects areconstructed using good utility practice and to ensure costoverrunsare constrained. Staff also participates in the CostAllocation Working Group, which advises the Commissioners’Regional State Committee on cost allocations methodologies;Economic Studies Working Group, which prepares studyparameters used in forecasts to determine future projectsneeds; and the Regional Tariff Working group, which writestariff amendments to the Open Access Transmission Tariff.Midwest Independent TransmissionSystem Operator Midwest ISOThe Organization of MISO States (OMS) was heavilyinvolved with the Midwest ISO’s planning for its first“Multi Value Projects” (MVP) portfolio, using the new costallocation methodology developed in 2010. OMS and theCommission staff advocated diligently through the MISO“Candidate MVP Task Force” regarding what the properportfolio of transmission projects should be, as well asmaking sure that MISO properly stated both the costs andthe benefits related to the planned projects. The MISOBoard approved the 2011 MVP Portfolio in late 2011 as partof its “MISO Transmission Expansion Plan” (MTEP).Commissioner Robert Kenney served as President of theOMS during the entire 2012 fiscal year. This leadershipinvolved representing OMS at a variety of meetings andadvocating for an expanded OMS role in the MISO costallocation and transmission planning processes at a varietyof venues, including the MISO Advisory Committee meetings.Commission staff continued to monitor and participatein Midwest ISO’s Planning Advisory Committee (PAC) andRegional Expansion Criteria Benefits (RECB) Work Groupmeetings. The PAC meetings discuss transmission projectsplanned for the MISO footprint. The RECB meetings are usedto determine the criteria for planning what transmissionprojects are constructed in the Midwest ISO footprint.During the past fiscal year, the Commission continued toprovide input on issues involving what scenario analysisshould be performed to determine what transmissionprojects should be built in the future.In addition, OMS continued to participate in the MidwestISO’s efforts to change the calculation of prices at nodeson the transmission grid, a concept known as “Convex HullPricing”. A change in the pricing mechanism utilized bythe Midwest ISO would affect the amount Missouri utilitiespay for energy bought from the Midwest ISO as well as theprice Missouri utilities would receive when they sell energythrough the Midwest ISO.Federal Energy RegulatoryCommission (FERC) DocketsFERC Order FERC Docet No. RM-23-FERC Order 1000 is a federal rule reforming federal electrictransmission planning and cost allocation requirements forplanning regions including American Electric Cooperative,Inc. (AECI), SPP and MISO. FERC Order 1000: (1) requiresneighboring planning regions to jointly determine, planand ultimately construct transmission projects that wouldjointly benefit both planning regions in a manner thatwould be more cost effective than if each planning regionindividually designed such projects; (2) requires planningregions to take federal, state and local public policies intoconsideration when planning transmission projects; and(3) removes the Federal Right of First Refusal (RoFR) fromincumbent transmission owners when certain transmissionprojects are being planned and assigned.Missouri is in an unusual position in that an RTO boundary(or seam) splits the state between SPP, MISO and AECI. Toensure Missouri and its electric ratepayers interests arerepresented, Commission staff participates in SPP and MISOFERC Order 1000 working groups. In SPP, staff participatesin the following FERC Order 1000 committees: SeamsSteering Committee, Strategic Planning Committee TaskForce on FERC Order 1000, Seams FERC Order 1000 TaskForce; Order 1000 Draft Tariff Task Force; Regional TariffWorking Group. In MISO, the Commission staff participatesin the following Order 1000 committees: Order 1000 “Rightof First Refusal” Task Team; Planning Advisory Committee;and Regional Expansion Cost Benefit Working Group. PSC Annual Report

REGULATORY ACTIVITYAdditional Noteworthy FERC Noticesof Inquiry and Contested CasesFERC periodically issues Notices of Inquiry throughwhich it requests comments and input from transmissionand electrical utilities, RTOs, and states’ utility regulatorycommissions over the complex issues it regulates andabout the regulations it enforces. When appropriate, theCommission comments on FERC issues.FERC Docet RM-26, Promoting TransmissionInvestment through Pricing ReformFERC issued a Notice of Inquiry seeking input onhow to incent increased transmission investment. TheCommission provided comments on its own initiative andjointly with the SPP Regional State Committee. In thosecomments, the Commission recommended denying the useof a hypothetical capital structure during construction torecover financial capital costs, tying the rate of return onsuch investments to the prevailing rates enjoyed by othersuch projects and to the cost of borrowing, and creatingmeans to ensure that projects with the best and least costestimates are selected for construction.FERC Docet ER2-83-, Empire DistrictElectric Company Formula Transmission RatesOn May 18, 2012, The Empire District Electric Companysought permission from FERC to use a FERC-approvedTransmission Formula Rate protocol to determine the ratesit charges for transmission service. The Missouri AttorneyGeneral intervened in the case to ensure the data used in theformula rate protocol would produce just and reasonablerates that would eventually be paid by retail customers.NATURAL GASMerger CasesSummit Natural Gas of Missouri/Missouri Gas Utility/Southern Missouri Gas CompanyCase No. GM-2-35Missouri Gas Utility (MGU) and Southern Missouri GasCompany, L.P. d/b/a Southern Missouri Natural Gas (SMNG)filed a joint application on April 27, 2011 seeking theacquisition of SMNG by MGU. The Public Service Commission(Commission) staff performed its analysis of the requestand on September 15, 2011, a unanimous stipulation andagreement was filed. On September 28, 2011, the Commissionapproved the stipulation and agreement. The Company filedits adoption notice, title sheet and name change on February2, 2012. Missouri Gas Utility became Summit Natural Gas ofMissouri, Inc. effective March 24, 2012.Liberty Energy Midstates Corporation/Atmos EnergyCase No. GM-22-3On August 1, 2011, Atmos Energy Corporation (Atmos) andLiberty Energy (Midstates) Corporation (Liberty) filed a jointapplication for Commission authority to sell certain Missouriassets to Liberty and certain other related transactions.Liberty was to be the surviving entity after the sale.On February 17, 2012, a unanimous stipulation andagreement was filed in the case, and on March 14, 2012that agreement was approved by the Commission. As partof the agreement, Liberty would maintain Atmos’ currenttariffs and formally adopt Atmos’ tariffs upon Commissionapproval of the sale. On July 2, 2012, Liberty filed two tariffsheets requesting approval of its formal adoption noticeand title sheet in compliance with the Commission’s orderin Case No. GM-22-3.Liberty filed for a name change to Liberty Energy(Midstates) Corporation d/b/a Liberty Utilities (LibertyUtilities) on July 2, 2012. That request was docketed asCase No. GN-23-, and ultimately approved by theCommission on July 23, 2012. The name change andadoption of the tariff became effective on August 1, 2012.Southern Missouri Natural GasCase No. GA-2-68Southern Missouri Gas Company, L.P. d/b/a SouthernMissouri Natural Gas was granted a certificate of publicconvenience and necessity (CCN) authorizing it to construct,own and operate a natural gas distribution system inBranson, Branson West, Reeds Spring and Hollister. TheCommission approved a final CCN for the Company on June24, 2008, with an effective date of July 5, 2008. Since thattime, the Company has been constructing the system and isnow serving customers in the Branson and Hollister areas.120100806040Missouri Jurisdictional Natural GasOperator Inspection Units —Gas Safety5962 Number of Inspection Units Units Inspected862PSC Annual Report 5

REGULATORY ACTIVITYIntrastate natural gas pipeline operators are divided into114 “inspection units” for purposes of the Program’s annualcomprehensive inspections which include 27,083 miles ofdistribution mains, 950 miles of intrastate transmissionlines and approximately 1.5 million service lines.Procurement AnalysisNatural Gas ACA ActivitiesThere are six natural gas local distribution companiesserving Missouri – Ameren Missouri, Liberty Utilities, EmpireDistrict Gas Company, Laclede Gas Company, Missouri GasEnergy and Summit Natural Gas of Missouri.The Procurement Analysis Unit conducts an annual ActualCost Adjustment (ACA) review at the end of each ACA periodfor each natural gas local distribution company (LDC). Aprimary purpose of the ACA process is to reconcile thecompany’s actual gas costs with what it charged customers(its billed revenues).In its purchased gas adjustment (PGA) filings, theCompany estimates its gas costs for the upcoming year.In the ACA, the estimate is reconciled with the actualprudently incurred cost of gas. In this function, theProcurement Analysis Unit reviews the LDC’s true-up ofgas costs for the period under review. A comparison ofbilled revenue recovery with actual gas costs will normallyyield either an over-recovery or under-recovery of the ACAbalances.Another purpose of the ACA process is to examine thereliability of the LDC’s gas supply, transportation andstorage capabilities. For its analysis, the Public ServiceCommission (Commission) staff reviews the estimated peakday requirements and the capacity levels to meet thoserequirements; peak day reserve margin and the rationalefor this reserve margin; and natural gas supply plans forvarious weather conditions.A third purpose of the ACA process is to review theLDC’s gas purchasing practices to determine the prudenceof the company’s natural gas purchasing and operatingdecisions.Commission staff will consider the financial impact oncustomers of the LDC’s use of its gas supply, transportationand storage contracts in light of the conditions andinformation available when the operational decisions weremade.The Procurement Analysis Unit, in conjunction with otherCommission staff, held discussions with LDCs regardingtheir hedging activities for the 2011/2012 winter to inquireas to whether the LDCs were taking actions to mitigate theeffects of potential winter price spikes on their price ofgas.Other ProceedingsAlthough focused largely on natural gas ACA activities,the Procurement Analysis Unit, because of its knowledge ofnatural gas issues, assisted in the review of LDC complaintcases, merger cases, proposed tariff changes, energyefficiency programs to encourage customers to make theirhomes and businesses more energy efficient, and certificate$1,500$1,450$1,400$1,350$1,300$1,250$1,200$1,150$1,100$1,050$1,000$950$900$850$800$750$700$650600Residential Natural Gas HeatingCustomer Bill for Annual Usageof 2 Mcf,386,3822cases, including Summit Natural Gas expansions whereexisting companies had plans to expand or bring naturalgas to areas without this service. The unit also assistedin the review of affiliated transactions that impacted therecovery of gas costs.Procurement Analysis also monitors conditions in thenatural gas markets where, since early 2010, a periodof relatively stable prices has prevailed. These relativelystable prices have been attributed to increased shalesupplies among other factors. Those increased shalesupplies have been driven by hydraulic fracturing andhorizontal drilling.Federal Natural Gas Activities,25The Federal Energy Regulatory Commission (FERC)regulates interstate natural gas pipeline companies. TheMissouri Public Service Commission (Commission) hasparticipated at FERC because decisions by the FERC directlyaffect Missouri natural gas consumers. The Commissionhas actively participated in company-specific and genericproceedings, focusing on those pipelines having thegreatest impact on Missouri consumers and/or thosewhere representation of Missouri interests is otherwiselimited or absent. The Commission continues to strive toensure that Missouri consumers receive reliable natural gastransportation service at reasonable rates.Missouri’s Local Distribution Companies (LDCs), includingboth natural gas utilities and electric utilities that generateenergy with natural gas powered combustion turbines,,8,8 Ameren Missouri (PEPL) Atmos (SEMO) Laclede Gas,2,22 Missouri Gas Energy (KC)PSC Annual Report

REGULATORY ACTIVITYmust rely on FERC regulated interstate pipelines for storageand delivery of their natural gas supplies. Currently 11interstate pipelines physically located within the boundariesof the state of Missouri are able to serve Missouri utilitycompanies, with an additional 4-6 upstream pipelinesproviding transportation and, in some cases, natural gasstorage service.Three pipelines deliver the majority of the state’s naturalgas to Missouri LDCs: Panhandle Eastern Pipe Line Company,LP (Panhandle), Southern Star Central Gas Pipeline Inc.(Southern Star), and CenterPoint Energy-Mississippi RiverTransmission Corporation (MRT). Southern Star has severalpipelines that serve the Kansas City, St. Joseph, Springfield,Joplin and St. Louis areas. Panhandle serves Kansas City,central Missouri and St. Louis. MRT serves St. Louis andportions of southeast Missouri.In addition, Natural Gas Pipeline Company of America(NGPL), Ozark Gas Transmission, LLC and Texas EasternTransmission serve southeastern Missouri; Kinder MorganInterstate Gas Transmission, LLC and PostRock KPCPipeline, LLC serve the Kansas City area; ANR PipelineCompany serves northern Missouri and MoGas Pipelineserves from St. Louis to Rolla. Rockies Express Pipeline,LLC also crosses the state of Missouri.On April 17, 2012, the Missouri Supreme Court issuedan opinion that Missouri Statutes do not support theCommission’s intervention at FERC. Since that time theCommission has not filed to intervene in interstate pipelinecases at FERC.Department Focus DuringThe 2012 Fiscal YearSouthern Star Cases of InterestIn recent years, Southern Star has filed at FERC for approvalto complete improvement/expansion projects at its Kansasnatural gas storage fields. The Commission has intervenedin four filed cases Docet No. CP-89, North Welda GasStorage Field; Docet No. CP8-, South Welda Gas StorageField; Docet No. CP-2, Elk City Gas Storage Field and inDocet No. CP-8, Alden Gas Storage Field). Southern Starfiled on April 27, 2012 for expansion of its McLouth StorageField in Docet No. CP2-285. This storage field is especiallycritical for natural gas deliveries into the Kansas City area.The migration of natural gas out of Southern Star’s storagefields and the alleged venting of natural gas from SouthernStar’s storage fields by oil well producers have contributedto increased costs for fuel losses over time. Southern Star’simprovements and expansions at the natural gas storagefields should help reduce the amount of fuel lost from thesefields, resulting in reduced costs to Missouri consumers.The Commission intervened in Docet No. CP-8 onMay 19, 2011. In the Alden Gas Storage Field expansionproject Southern Star proposes, among other things, toexpand the storage field boundary and buffer zone by anadditional 1,592 acres to better secure the integrity of thestorage field. The FERC issued an amended certificate onMay 30, 2012 which requires Southern Star to file quarterlyupdates of its progress. Southern Star is also required tomake additional filings on any potential changes to the gasloss reduction plan currently in place.On February 20, 2012, Southern Star filed FERC DocketNo. CP-3 to replace three miles of 12-inch XT pipe with20-inch pipe in Johnson County, Missouri. This filing isthe next phase of the pipeline replacement project whichreplaces sections of pipeline that were originally placed intoservice in the 1930s. The Commission intervened in thiscase to monitor construction activities and any land ownercomplaints. The project is still ongoing and Southern Starwill replace more sections of pipeline in Missouri over thenext two to three years.Fuel Tracker CasesInterstate pipeline companies are permitted to chargecustomers for natural gas that is lost or used duringtransmission of gas from one area to another. This charge iscollected through a surcharge, which the pipeline companymay adjust annually.Interstate pipelines typically use natural gas in two ways:to fuel compression stations and to replace gas that thepipeline loses in the transportation process. Gas may belost from a pipeline in several ways including: leakageduring repair or maintenance of the pipeline. The majorityof Fuel and Lost-and-Unaccounted-for-Gas (LUFG) ratefilings are accepted and approved by FERC without issue.In some instances, the Commission has intervened in casesso that in the event issues arise, it can fully participate insettlement discussions or any further proceedings thatcould make a difference in the outcome.On March 13, 2012, the Commission intervened inSouthern Star’s fuel filing Docket No. RP2-3. TheCommission commented that inclusion of two gasloss incidents in the LUFG percentage calculation wasinappropriate. FERC agreed with the Commission andordered that the gas volumes associated with these two gaslosses be removed from the calculation used to set rates forMissouri consumers.On April 4, 2012, the Commission intervened inCenterPoint Energy Gas Transmission Company, LLC‘s(CEGT) fuel tracker filing Docket No. RP2-98. In its8 PSC Annual Report

REGULATORY ACTIVITYfiling, the Commission brought to FERC’s attention two gasloss incidents which, per Commission precedent, shouldnot be included in the calculation of the LUFG percentage.FERC agreed with the Commission and required CEGT toremove the two losses in question and recalculate the fuelloss reimbursement percentage to be charged to Missouriconsumers.The Commission will continue to analyze the pipelinecompanies fuel recovery cases to determine whether therates to be charged Missouri consumers are just andreasonable.Atmos Energy Corporation/Liberty Energy Midstates Corp.Atmos Energy sold its Missouri assets to Liberty EnergyMidstates. Atmos filed at FERC to transfer its Missourinatural gas transmission and distribution facilities to LibertyEnergy. The Commission’s concern regarded facilitieslocated in western Missouri which contained a 35-foot stubline that crosses the Kansas/Missouri border. After thesale, this stub line will be controlled by Atmos’ Colorado/Kansas division, not Liberty Midstates.The Commission intervened at FERC over concerns asto whether Missouri customers would continue to receivethe same level of service after the sale to Liberty Energywas final. The Kansas Corporation Commission (KCC) alsofiled comments in the case. The Commission was able tonegotiate with Atmos and Liberty Energy to assure reliableservice to Missouri customers.MoGas Pipeline LLCAt the end of June 2006, FERC regulated MissouriInterstate Gas LLC (MIG), and Missouri-regulated MissouriPipeline Company LLC (MPC) and Missouri Gas CompanyLLC (MGC) applied to FERC for authority to merge into asingle FERC-regulated interstate pipeline. On April 20,2007, FERC issued an order authorizing the three affiliatedpipelines to merge as MoGas Pipeline (MoGas). The FERCorder also reduced MoGas proposed rates by approximately$2 million as a result of the Commission’s (and otherparties) challenge to the rates.In the same proceedings, the Commission challengedFERC’s order that permitted MoGas to include an acquisitionpremium in rates that resulted in an annual overcharge toMissouri customers of approximately $1.3 million annually.FERC denied the Commission’s challenge. The Commissionappealed FERC’s decision to the United States Court ofAppeals for the D.C. Circuit Docket No. 9-2 andon April 13, 2010, the DC Circuit Court agreed with theCommission’s arguments and vacated the FERC’s order andremanded the case to FERC.On August 1, 2011 the FERC held a hearing to addressthe acquisition premium issue. The initial decision by theAdministrative Law Judge in this case, issued in November2011, supported the Commission’s position. The finalFERC order in this case is still pending.CenterPoint Energy-Mississippi River TransmissionIn October 2011, Mississippi River Transmission (MRT)provided notice to the public that it intended to meet withcustomers and state commissions prior to filing a FERC casefor a rate increase. The Commission participated in prefilingsettlement discussions with CenterPoint Energy-MississippiRiver Transmission (MRT) during the summer of 2012.During June and July, customers, the Commission and otherinterested parties negotiated with MRT. These negotiationsfailed to reach a settlement among the parties. On August15, 2012, MRT filed a Section 4 rate case with FERC asking fora rate increase of approximately 80% to recover nearly $104million from customers through rates annually. MRT servesthe St. Louis area natural gas market. Both the Arkansas PublicService Commission and the Illinois Commerce Commissionhave intervened in the Section 4 rate case.WATER AND SEWERUNITRate Cases Decided or FiledMissouri-American Water CompanyCase No. WR-2-33On June 30, 2011, Missouri-American Water Company(MAWC) filed a water and sewer rate case with the PublicService Commission (Commission) seeking to increaseannual water and sewer revenues by approximately $43million. The Commission granted MAWC an overall rateincrease of approximately $24 million in an order issued onMarch 7, 2012, based upon a non-unanimous stipulationand agreement filed by the parties to the proceeding.Although the agreement was non-unanimous, no partyopposed the agreement that settled all issues in the case.The increase to water revenues approved was $23,275,000and the increase to sewer revenues approved was $725,000on an annual basis. Rates went into effect on April 1, 2012.For MAWC customers in the former Aqua Missouri serviceareas, rates went into effect on June 1, 2012.Water and Sewer Unit StaffThe Water and Sewer Unit (Unit) provides technical expertisein the operation of the water and sewer companies in Missouriand analyzes applicable tariffs and tariff filings to ensure theyare in compliance with appropriate state law, Commissionrule, and are fair for both the utility and consumer.The main functions of the Unit are to assist small companiesin their day-to-day operations, conduct inspections, assistcustomers, investigate customer complaints, work on tarifffilings, review small and large company rate requests, andreview applications for certificates of public convenienceand necessity to ensure that a proposed utility is in thepublic interest.The Unit plays a key role in developing appropriate ratesrequired for the utility to collect the revenues that havebeen approved by the Commission.Another major role fulfilled by the Unit is investigatingcustomer complaints regarding quality of service issues.Unit personnel spend many hours in the field investigatingcomplaints and working with the customer and the companyto find solutions to the customer’s concerns.There are approximately 75 regulated water and/orsewer companies in the State of Missouri. Most of thesePSC Annual Report 9

REGULATORY ACTIVITYcompanies are considered small or very small based uponthose definitions as provided by the National RegulatoryResearch Institute (NRRI). One of the major challenges isproviding the utility with reasonable rates to make neededrepairs and Missouri Department of Natural Resources(DNR) mandated upgrades while at the same time keepingthose rates reasonable for consumers.In fulfilling its duties, the Unit also works very closelywith DNR whose responsibilities include ensuring that theutilities are complying with the applicable federal and stateenvironmental and water quality laws and regulations.The Commission and DNR share information aboutthe companies they regulate under a Memorandum ofUnderstanding. This agreement includes provisionsregarding the agencies’ cooperation and coordination onoverlapping matters such as DNR’s issuance of constructionand operating permits and the Commission’s utility servicearea certification process.The Unit is also active in federal activities that impactwater and sewer industries in Missouri. Many of the issuesthat are impacting these industries in Missouri are obstaclesin other states as well; therefore, the Unit participates inworking groups with NRRI and the National Association ofRegulatory Utility Commissioners (NARUC).TELECOMMUNICATIONSPublic Service Commission Oversightof Telecommunications ServiceThe Missouri Public Service Commission (Commission)continues to provide oversight of many telecommunicationsactivities in Missouri. Although the Commission no longerprovides detailed examinations of telephone companyprices and earnings, it nevertheless provides certificationand regulatory oversight in many areas including universalservice, telephone numbering, intercarrier compensation,Interconnected Voice over Internet Protocol and videoservice registration.The Commission also maintains authority to investigatematters pertaining to telephone service quality. TheCommission and its staff also provide mediation andarbitration services between and among telecommunicationcompanies as well as end-user customers.The Commission does not regulate wireless servicesor broadband data services provided over the Internet.However, the continued development of intermodalcompetition often results in non-regulated entitiesappearing in matters before the Commission.Reform of Intercarrier CompensationIntercarrier compensation refers to the charges that onetelephone company pays to another telephone company tooriginate, transport, and/or terminate telecommunicationstraffic. Intercarrier compensation payments are governedby a complex system of federal and state laws and rules.There are two major forms of intercarrier compensation –access charges and reciprocal compensation. Although thesame or similar facilities are used to originate, terminateand transport all types of telephone traffic, the rates forintercarrier compensation vary based on several factorsincluding: (1) where the call begins and ends; (2) what typesof companies are involved (landline, wireless, etc.); and (3)what type of traffic is involved (voice, data, wireless, etc.).In November 2011, the Federal CommunicationsCommission (FCC) instituted national reforms forintercarrier compensation. This action began what isexpected to be a nine year transition period in which localtelephone companies implement various aspects of the newfederal guidelines.In Missouri, over 91 incumbent and competitive localtelephone companies have made the necessary tariff filingsto implement the first phase of the new federal mandate.As of July 2012, Missouri’s local telephone companies haveimplemented two significant changes. The first change wasto begin charging the same for terminating intrastate Voiceover Internet Protocol Telephone (VoIP) calls as is permittedfor interstate VoIP calls. The second change implementedrequired each local telephone company to reduce itsterminating access rates. Further activity is planned in2013 whereby Missouri’s intrastate terminating switchedaccess rates will be reduced to corresponding interstaterate levels.Telephone NumberingThe Commission serves as an impartial telephonenumbering administrator in Missouri, working closely withthe National Number Pool Administration to implementindustry guidelines to include telephone numberreclamation procedures, and the issuance of new telephonenumbers in quantities sufficient to serve new telephonenumbering needs.The Commission also monitors national activities thatimpact telephone number administration in Missouri.These activities serve to meet expectations that telephonenumbers are utilized efficiently as the Public SwitchedTelephone Network continues its evolutionary migration toan Internet Protocol-based successor network.The Commission also serves in a capacity to review, andpotentially reverse, decisions by federal authorities which2 PSC Annual Report

REGULATORY ACTIVITYhave denied additional telephone numbers to telephonecompanies when specific utilization guidelines are not met.Often referred to as “safety valve” requests, such authoritypermits the Commission to examine and verify telephonenumbering needs involving individualized companyspecificsituations. In the 2012 fiscal year, the Commissionwas asked to examine and make determinations in fivesuch company-specific situations. In all five cases, theCommission granted the telephone company requests anddid so in an expedited manner.The Commission continues to be aggressive in its effortsto conserve telephone numbers. Those efforts have enabledMissouri to delay the implementation of new area codes inthe state.Missouri’s area codes are projected to exhaust allavailable telephone numbers at the following time periods:AREACODEPROJECTED DATE OF TELEPHONENUMBER EXHAUSTION*314 1st quarter of 2022417 3rd quarter of 2028573 4th quarter of 2022636 4th quarter of 2034660 3rd quarter of 2028816 1st quarter of 2026*Forecast as approved by the FCC in April 2012. The exhaust datesare reviewed twice a year by numbering authorities.Programs Administeredby the Missouri CommissionMissouri Universal Service Fund: The Missouri UniversalService Board (Board), consisting of the Commission andOffice of the Public Counsel, oversees the Missouri UniversalService Fund (USF) pursuant to Section 392.248 RSMo.The Missouri USF solely provides funding for discountedtelecommunications services for qualifying low income anddisabled customers. The Missouri USF only provides fundingto landline carriers and does not provide any funding forwireless carriers. There are 51,499 landline subscribers inMissouri receiving support (47,919 low income and 3,580disabled) which represents a 19% decrease over the past year.Federal Universal Service Fund Program: The federalUSF program provides a variety of funding opportunitiesfor providing telecommunications services. Most notablewithin the federal USF program are the high-cost supportprogram and the Lifeline program. Both programs weresignificantly reformed this past year by the FCC.The FCC released reforms for the federal USF high-costsupport program in November 2011. The FCC’s reformscapped federal USF high-cost support funding at $4.5billion. The FCC also created the Connect America Fund toultimately replace all existing high-cost support mechanismsand use such funding for expanding broadband serviceavailability. In addition, the FCC created the Mobility Fundto help expand mobile broadband networks. Althoughcertain federal USF high-cost support will be phased out overa period of years, competitive bidding will be introduced toaward funding.The FCC’s reforms will have different impacts on carriers;however, reform provisions include ways for incumbentlocal telephone companies to maintain funding levels ifcertain conditions are met. For example, the local ratesfor an incumbent rate of return regulated company mustmeet or exceed certain rate levels in order to retain mosthigh-cost support funding. Ultimately, the FCC projects itsreform measures will enable 90% of rate-of-return carriersto see high-cost support reductions of less than 20%. TheFCC’s reforms are also designed to increase accountabilityand oversight.The FCC released reforms for the Lifeline program inFebruary 2012. The FCC’s reforms generally tightenrequirements within all states for participation in thePSC Annual Report 2

REGULATORY ACTIVITYprogram. Although state commissions continue to havesome discretion in the administration of the Lifelineprogram, all states must now require Lifeline applicants tosubmit proof of eligibility.In Missouri, the Commission has long required programparticipants to show proof of eligibility when applying tothe program. The FCC also now requires a company toannually recertify the continued eligibility of all Lifelinesubscribers. The FCC’s reforms required the MissouriCommission to allow applicants to qualify for the Lifelineprogram based on the eligibility criteria of 135% of thefederal poverty level.The FCC also established a duplicate database designedto identify Lifeline customers receiving more than oneLifeline benefit per household. As of July 2012, there wereapproximately 250,000 Missouri subscribers to the Lifelineprogram, approximately 200,000 of those are wirelessLifeline subscribers.State commissions such as the Missouri Commission areexpected to continue to help the FCC in administering theseprograms. The FCC continues to rely on state commissionsto determine if a company should be allowed to drawsupport from the federal USF. For example, in order toqualify for certain federal USF support, a company mustmeet certain state and federal criteria establishing thecompany as an eligible telecommunications carrier (ETC).ETCs receiving high-cost federal USF support must also beannually certified by a state regulatory commission. Suchannual certification is intended to ensure that companies areappropriately using the funding. In Missouri, 46 companies(40 incumbent local telephone companies, three wirelinecompetitive local exchange companies and three wirelesscompanies) currently go through the annual certificationprocess in order to continue to receive high-cost federalUSF support. During the past year, several companiesreceived ETC status in order to receive federal USF fundingfor Lifeline programs only.Relay Missouri: The Commission oversees the RelayMissouri service pursuant to Section 209.253 RSMo. RelayMissouri is a statewide system using third party interventionto connect deaf, hearing-impaired and speech-impairedindividuals with the telephone system.A Relay Missouri fund is used to provide funding for thisservice. The Relay Missouri fund is also used to fund anequipment distribution program which is administered bythe Missouri Assistive Technology Council. Relay Missouriis currently funded by a $.11 surcharge applied to basiclocal telecommunications line service. The surcharge levelis periodically reviewed by the Commission according torequirements established by Missouri statutes.Administrators. This subcommittee meets periodically todiscuss issues relevant to states with a state USF.The Commission also continues to actively participatein a number of telecommunications issues before theFCC.Wholesale DisputesOn November 5, 2010, Nexus Communications, Inc(Nexus) filed a complaint Case No. TC-2-32 seekingto recover back promotional credits from Southwestern BellTelephone Company d/b/a AT&T Missouri (AT&T). Thecomplaint involved offering retail services at wholesalerates. The Commission staff’s seventh status reportwas filed on September 4, 2012, which indicated AT&Tand Nexus continue to engage in discussions over theirdifferences.On October 19, 2011, a case was opened (Case No. TW-22-2 to serve as a repository for documents andcomments associated with an investigation into call routingand call completion problems in Missouri.On November 7, 2011, the Commission staff conducteda workshop in which industry participants came together todiscuss concerns first raised by small rural local exchangecarriers in Missouri. Staff filed its initial investigative reporton January 6, 2012 and another report on August 10,2012. Staff met with representatives of the small telephonecompanies on August 4, 2012, and continues to work withindustry representatives and to evaluate the results ofnetwork reliability testing.On April 3, 2012, a case (Case No. TC-22-33 wasbrought before the Commission due to allegations thatHalo Wireless, Inc. was violating provisions of Missouri’sEnhanced Record Exchange (ERE) Rule.Most prominently, Halo was accused of deliveringlandline-originated traffic and of refusing to paycompensation for the traffic. Based on the allegations,certain local telephone companies commenced to blockHalo’s traffic whereupon Halo filed a formal complaint tostop the blocking activities.Federal Telecom ActivityCommission members and staff are active in several nationalorganizations that respond to national telecommunicationspolicy. Natelle Dietrich of the Commission staff is a staffmember of the federal/state Universal Service Joint Board.The Universal Service Board makes recommendationsto the FCC on issues related to promoting universaltelecommunications service throughout the United States.Commission staff Policy Analyst Dana Parish has beenappointed to the NARUC subcommittee of State USF22 PSC Annual Report

REGULATORY ACTIVITYAs part of its response to Halo’s complaint, AT&T fileda counterclaim seeking to cease performance underits interconnection agreement with Halo. After Halo’sjurisdictional objections were rejected by the FCC and thefederal courts, the Commission convened an evidentiaryhearing on June 26, 2012.The Commission issued an order on August 1, 2012,concluding that Halo had violated the ERE Rule and thatit had committed a material breach of its interconnectionagreement with AT&T. The Commission directed AT&T toimmediately cease performance with Halo, and found thatHalo was liable for access charges on the interexchangelandline traffic Halo had delivered for termination toMissouri end-user customers.On March 1, 2012, Big River Telephone Company fileda complaint (Case No. TC-22-28 against AT&T overallegations that Big River’s enhanced services traffic issubject to exchange access charges. After a June 29, 2012mediation session concluded with the parties unable toreach agreement, the Commission approved a proceduralschedule and set the matter for a January 8, 2013 evidentiaryhearing.Local Telephone Rate IncreasesIn response to FCC efforts to reform intercarriercompensation and the federal Universal Service Fund,Choctaw Telephone Company and MoKan Dial TelephoneCompany filed notices of proposed local rate increases onMarch 14, 2012.Choctaw and MoKan filed the increases to residentialand business customers because base telephone rateswere below recently established FCC benchmark levels. Inoverturning objections to the increases, the Commissionfound the rate proposals reasonable. These cases (CaseNos. TR-22-298 & 299 preceded similar rate increasesas other local telephone companies filed to meet the federalbenchmarks in order to avoid losing federal universalservice high cost support funds.8006004002000Annual Number of Filings5335Tariffs 2 2240353025201510502InterconnectionAgreementAnnual Number of Filings3685Video CasesCompleted MattersIVoIP Cases 2 22On December 21, 2011, the Commission released theMissouri Broadband Report. The report was compiled inresponse to a request from the Missouri Senate Committeeon Commerce, Consumer Protection, Energy and theEnvironment. A case (Case No. TW-2-362 wasestablished to engage in a fact-finding process in order to:(1) Review the FCC’s National Broadband Plan and makerecommendations to the Missouri General Assembly onhow to maximize broadband development in Missouri; (2)Solicit input from the public and all providers of broadbandservice in Missouri regardless of technology; (3) Assessthe current level of technology, including advertised andactual speeds; (4) Identify unserved and underserved areasof the state and identify barriers to broadband deployment;and (5) Recommend potential public policy decisions toincrease deployment and availability of broadband servicesin Missouri.Overall the report indicates 1% to 13.5% of Missourianslack access to broadband service depending on broadbanddata sources.A case (Case No. TC-2-396 was established on June20, 2011 where the Commission was asked to rule on theapplicability of AT&T’s tariff regarding AT&T’s consumerback-billing of franchise and other municipal taxes. TheCommission issued its order and summary determinationon September 13, 2011. This case is currently pendingbefore the Missouri Court of Appeals, Western District.The Commission, in collaboration with the State’sEmergency Management Agency (SEMA), hosted a workshopon June 28, 2012, regarding disaster planning. Theworkshop exchanged information about SEMA’s processfor gathering data related to communications recoveryand restoration efforts, including the Commission’s role inresponse to a disaster event. The Commission conducteda survey of the disaster recovery plans for 97 facility-basedproviders offering landline or wireless service in Missouri.Survey results were revealed and discussed at the workshop.23PSC Annual Report 23

REGULATORY ACTIVITYMANUFACTURED HOUSING AND MODULARUNIT PROGRAMThe Manufactured Housing and Modular Unit Program(Program) of the Missouri Public Service Commission(Commission) is responsible for overseeing the annualregistration of dealers and manufacturers of manufacturedhomes and modular units, as well as the installers of newmanufactured federal Housing and Urban Development(HUD) homes. Program staff also prescribes and enforceuniform construction, safety and installation standards byconducting inspections, which include enforcement of tiedown and anchoring requirements.The Commission has a toll-free number, -8-89-38,for consumers who have questions or complaints regardingmanufactured homes or modular units. Staff conducts freehome inspections for consumers requesting an inspection.Additional information is available on the Commissionwebsite at www.psc.mo.gov. Once at the site, click on themanufactured housing tab at the top of the page.During the 2012 fiscal year, the Program received over2,377 calls from consumers, manufacturers, retail dealers,installers, finance companies and local building codeofficials. Field staff conducted on-site and consumercomplaint inspections. Program staff were able tosuccessfully resolve approximately 98% of complaintsreceived by working with manufacturers, dealers, installersand homeowners.In addition, staff conducted random on-site inspectionsprior to the completion of the installation of a home. Onsiteinspections can help identify any installation problemsand those problems can be repaired before the installationof the home is completed, reducing repair costs andensuring that the consumer has a properly installed, longerlasting home. In many cases, these on-site inspections areinitiated or requested by the home installer, dealer or thehome owner to ensure the site is properly prepared beforethe home is placed on the site.2 PSC Annual ReportOversight and RegulationStructures that are not properly installed may result invery expensive repairs which can take weeks to complete.Most of today’s homes and commercial units are multisectionstructures installed on crawl spaces or basementfoundations or below frost grade footings. Many of thesestructures have high pitched hinged roofs and require veryspecialized equipment to install.Many multi-section units require several weeks to fullycomplete from site preparation to final close up and interiorfinish. Program staff work with local communities aroundthe state to ensure manufactured homes and modularunits are built to the applicable building and safety codesand are set up and installed according to applicable statestandards.Manufactured Homes & Modular Unit SalesApproximately 1,012 new manufactured homes and newmodular units were sold in Missouri during the 2012 fiscalyear. In addition, 1,582 used homes were sold in the state.Both of these numbers represent an increase from fiscalyear 2011 information.Modular and manufactured homes fill a major housingvoid in many rural areas where site built homes are difficultto construct in a timely manner. Pursuant to a recentreport published by the Governmental Accounting Officeand the Federal Housing Institute, approximately fivepercent of Missouri residents live in a manufactured home.In addition, commercial modular units are becoming a verypopular and affordable alternative to site built commercialunits.Commercial modular units range from small single sectionunits to large 16 to 20 section multi-family structures. Othercommercial units include specialized units such as medicalfacilities, banks and jails. Many of these commercial unitscan be delivered and fully operational within a very shortperiod of time. Program staff work with local buildingand code officials to ensure these structures meet theapplicable commercial building code requirements underthe International Building Codes (IBC).Modular unit classrooms are a major component ofaffordable classrooms in many school districts throughoutthe state. Program staff continues to work with schooldistricts to ensure these units are installed and anchoredproperly so that schools have safe environments for allschool children.LegislationThe Commission worked with other interested partiesin passage of Senate Bill 630 during the 2010 legislativesession. The Missouri Manufactured Housing Association(MMHA) initiated the legislation and the Commissionprovided guidance and support. The Commission regularlyassists home owners and works with the Department ofRevenue (DOR) with registration and title questions from

REGULATORY ACTIVITYconsumers who have purchased used manufacturedhomes.Program staff is working with MMHA and DOR regarding aproposal that would allow the DOR to issue titles for certainused manufactured homes where the serial number on thehome cannot be determined and/or the disposition of theoriginal title or Manufacturer’s Statement of Origin cannotbe located.During the 2012 legislative session, Program staffworked with the commercial modular building industryregarding the licensing and certification of both new andused commercial modular unit installers. The requirementmirrors a similar requirement implemented in 2005 forinstallers of HUD manufactured homes.Legal ActionDuring the past year, the Program Director filed formalcomplaints against various dealers and unlicensed entitiesfor alleged violation of state laws.Complaints were filed against certain dealers forallegedly selling damaged homes that did not complywith the applicable building codes; improper installationand anchoring; failing to deliver homes to consumers whohad paid the dealer for the homes; and failing to makecorrections in a timely manner.The Commission’s dispute resolution hearing processhas reduced the number of formal complaints filed with theCommission. This process includes on-site hearings, whichare conducted at the home’s location with the homeowner,manufacturer, dealer, installer(s) and staff. Correctiveaction is identified by the staff and the responsible party isrequired to make the applicable changes. These hearingshave reduced the legal cost for the industry, the consumerand the Commission.Joplin UpdateProgram staff continue to work with industry officialsin approving new manufactured homes and commercialunits (such as banks, medical, office units) moving into theJoplin area after the devastating tornado in May 2011. Itis estimated that approximately 200 families still occupySTATISTICS FOR FISCAL YEAR 22Registered Manufacturers: ..............119Registered Dealers: ....................226Registered Installers: ...................98Homes Sold (New& Used): ............ 1,631Consumer Complaint Inspections: .........122On-Site Inspections: ...................332Dealer Lot Inspections: .................169Dealer Lot Investigations: ................55Modular Unit Seals Issued: ..............634Modular Unit Plans Approved: ............340Installer Decals Issued: .................748Federal Emergency Management Agency (FEMA) homes andapproximately 3,500 students occupy modular classrooms.To date, no structural or code failures have been reportedfrom the installation of either a HUD home or modularclassroom.Program staff worked with installers ensuring that homesand modular classroom units were initially set-up andanchored properly.CONSUMER SERVICESThe Consumer Services Unit responds to informationrequests and responds to consumer complaints andinquiries regarding utility service. Consumer Servicesensures utility compliance with Public Service Commission(Commission) rules and regulations as well as with theutilities’ Commission-approved tariffs. Consumer Servicesalso works to educate customers, utilities and the publicon utility-related consumer service issues, rights andresponsibilities, with a focus on promoting understandingto prevent disputes.The Consumer Services Unit has full-time investigatorswho handle a variety of consumer issues including billingproblems, payment arrangements, denial of service issues,disconnection and service connection issues, enforcementof rules and regulations and safety issues. ConsumerServices is the link between consumers and the utilitycompany that serves them. Consumer Services handles allcontacts in a prompt, fair and practical manner.Consumer Services staff encourage all parties to focus onpreventing problems before they occur. When consumerissues are found, investigators guide the parties to identifyand correct the cause.Consumer Services staff also handle pro se formalcomplaint cases, participate in customer-service focusedreviews of utility operations and testify in formal casesbefore the Commission regarding issues that affectconsumers and low-income utility assistance programs.PSC Annual Report 25

REGULATORY ACTIVITYConsumer Services staff are actively involved in consumereducation efforts through a number of venues includingconsumer outreach forums, energy fairs, health and seniorservice fairs and Community Action Agency forums.The Commission received over 22,000 consumer-relatedcontacts in 2012, an increase of approximately 25 percentfrom the previous year. Contacts include complaints,inquiries regarding rules and regulations, informationrequests, non-jurisdictional requests, and public commentsrelated to pending utility cases.FY 22Top Complaint Issues - Discontinuance of Service2 - Denial of Service3 - High Bill4 - Disputed Bill5 - Rebill6 - Transfer Bill - Service Outages8 - Repair ServiceENGINEERING ANDMANAGEMENTSERVICESManagement Services StaffManagement Analysts in the Engineering and ManagementServices Unit (EMSU) participated in a variety of cases andaudit projects during 2012. EMSU staff performed analysisin conjunction with the review of numerous small waterand sewer companies to assist them in providing soundcustomer service as well as efficient and effective businesspractices.The audit program is designed to assist small companies(defined as having approximately 8,000 or fewer customers),in a variety of areas including: customer billing, paymentremittance, credit and collections, complaint handling,business office operations and record retention. Thisprogram is utilized by management analysts when a smallutility requests a rate increase.As part of the audit program, management analystsproduce a report which contains a description of thecompanies’ processes and procedures as well as auditfindings and recommendations for improvement. The auditprogram also includes implementation reviews, along withcontinued monitoring of the small utilities after completionof the audit reports. Such follow-up work was performedon a number of small companies during 2012.Management Analysts performed service qualityanalysis during 2012 on a number of small water andsewer companies in the context of rate increase requests,acquisition and new certificate cases.Service quality analysis was performed on the followingcompanies during the 2012 fiscal year: Meramec SewerCompany, Lincoln County Sewer & Water, LLC., US WaterLexington, Tri-States Utilities, Liberty Water Utilities,Midland Water Company, Canyon Treatment Facility,LLC, Saddlebrooke, Emerald Point Utility Company, KMBUtility Corporation, Noel Water Company, Valley WoodsWater Company, Lakeland Heights Water Company, Inc.,Oakbrier Water Company, Inc., RD Sewer Co., LLC, TheEmpire District Electric Company - water operations, TaneyCounty Utilities, Raytown Water Company, Rogue CreekUtilities, Gladlo Water and Sewer Company, Highway HUtilities, RDE Water, I.H. Utilities and House Springs SewerCompany.Management analyst staff was also involved in theMissouri-American Water Company rate case (Case No. WR-2-33, as well as associated customer complaints/inquiries and public comments. Staff’s involvement in thiscase was prompted by service quality matters, and thePublic Service Commission’s (Commission) order resultedin periodic meetings between the staff and company toaddress billing calculations, call center topics, includingcall escalation procedures, and other service qualitymatters.EMSU staff also meets quarterly with Kansas City Power& Light and KCP&L Greater Missouri Operations Companyto address service quality topics as a result of the GreatPlains Energy/Kansas City Power & Light Company/Aquila,Inc. merger. (Case No. EM-2-3. During the 2012fiscal year, staff also met periodically with Ameren Missouriregarding its call center performance and other topics.EMSU staff also participated in the Commission’sTelecommunications Department’s review of UniversalService Fund (USF) certifications for Northeast MissouriRural Telephone Company and Chariton Valley TelephoneCorporation. Staff analyzed a variety of processes andpractices during each of these reviews, including customerbilling and payment remittance, credit and collections, localbusiness office operations and the company’s handling ofcustomer complaints and inquiries. EMSU staff submitted anumber of data requests and performed on-site work.Management Analysts participated in Liberty Utilities’request to purchase the Missouri natural gas operations ofthe Atmos Energy Corporation (Case No. GM-22-3.In this case, service quality matters were reviewed to ensurethe sale would not be detrimental to the public interest.In a similar role, Management Analysts also participated inEnergy Transfer Equity L.P.’s request to acquire the equityinterests of Southern Union Company, doing business inMissouri as Missouri Gas Energy (Case No. GM-2-2.Management Analysts also attended a number of localpublic hearings regarding rate increase requests during26 PSC Annual Report

REGULATORY ACTIVITYthe fiscal year and participated in the investigation andresolution of several customer complaints.Staff continues to receive and review quality of servicereports from a variety of companies as a result of mergersand rate cases. These reports contain informationregarding customer service, including data on staffinglevels, call center indicators such as average speed ofanswer and abandoned call rate, and the number ofestimates performed. Staff monitors the call centerperformance of all of the state’s large regulated naturalgas and electric companies as well as Missouri-AmericanWater Company. Staff specifically reviews and analyzes callcenter performance trends, and these reviews often resultin additional inquiries and discussion with the utilitiesregarding performance.Management Analysts also participated in theCommission’s Consumer Services Roundtable meetings thatoccurred throughout the year to contribute toward potentialrevisions to Commission Chapter 13 rules regarding serviceand billing practices for residential customers of gas,electric and water companies.Engineering StaffEMSU engineering staff performed depreciation analysison a number of utility companies during the fiscal year.The purpose of depreciation in a regulatory environment isto recover the original cost and cost of removal less salvageof capital investment from customers and to allocate thosecosts over the useful life of the assets.Annual depreciation expense, distributed over the life ofeach asset, results in the full recovery of the original costplus cost of removal of capital assets.The engineers’ objective is to propose depreciation ratesthat are fair and appropriate for each company as well asits customers. Historical plant additions and retirementsare studied in computer models that assist depreciationengineers in determining an average service life for utilityassets that are classified in a system of plant accounts.Depreciation comprises a significant component of the costused to develop utility rates paid by consumers.These engineers also participate in plant visits to observethe physical assets represented in the individual accountsthat are being depreciated. Commission rules providespecific requirements for utilities to maintain its plantrecords.During 2012, engineering staff provided expert analysesin the context of several large utility rate cases includingthose filed by Ameren Missouri (Case No. ER-22-66,The Empire District Electric Company (Case No. ER-22-345 and Kansas City Power & Light and KCP&L GreaterMissouri Operations Company (Case Nos. ER-22-4and ER-22-5, respectively). Staff also participatedin Missouri- American Water Company’s request for waterand sewer rate increases (Case Nos. WR-2-33 andSR-2-338.Depreciation analysis was also conducted in LibertyUtilities’ request to acquire the Missouri natural gasoperations of the Atmos Energy Corporation (Case No. GM-22-3.EMSU depreciation engineers participated in a requestfiled by Laclede Gas Company for depreciation treatmentof a new computer system (Case No. GO-22-363.Staff also participated in numerous small water and sewercompanies in the context of rate cases. A small companymerger, a company sale, and new certificate casesrequired depreciation review and analysis. EMSU staffalso continues to observe and report on ongoing activitiesat Ameren Missouri’s Taum Sauk Power Plant in easternMissouri.PSC Annual Report 2

YEAR IN REVIEW2011July 3 Public Service Commission (Commission) grants anelectric rate increase of approximately $172 million toAmeren Missouri. When the electric company filed its raterequest on September 3, 2010, it sought to increase annualelectric operating revenues by approximately $263 million.August Commission approves application authorizingAlgonquin Water Resources of Missouri, LLC d/b/a LibertyWater to purchase the water and sewer systems of KMBUtility Corporation.August Commission approves application authorizingAlgonquin Water Resources of Missouri, LLC d/b/aLiberty Water to purchase the water system of Noel WaterCompany, Incorporated.August Commission announces changes to its structureand organization. The PSC now consists of three divisions.Steve Reed heads up the Secretary/General Counsel Office.Wess Henderson is the Director of the Administrationand Regulatory Policy Division and Cherlyn Voss is theDirector of Regulatory Review.August 3 Commission opens case to investigate the costof complying with federal environmental regulations.September 2 Commission observes National TelephoneDiscount Lifeline Awareness Week.September 28 Commission approves agreement whichauthorizes the merger of Southern Missouri Gas Company,L.P. d/b/a Southern Missouri Natural Gas and MissouriGas Utility, Inc.October 2 Commission approves agreement whichauthorizes Veolia Energy Kansas City, Incorporatedto increase annual steam operating revenues byapproximately $1,379,200.October 4 Commission holds its first “Utility Days” inChesterfield. “Utility Days” are designed to provide thepublic with information and education in a “one-stopshop”setting.October 8 Commissioner Terry Jarrett is named chairmanof the National Association of Regulatory UtilityCommissioners’ (NARUC) Committee on CriticalInfrastructure.October 9 Commission opens case to investigate allegedtelephone call routing and call completion problems inMissouri.November Commission Cold Weather Rule takes effect.November Commissioner Robert Kenney is named thenew chair of a national campaign charged with makingthe annual Martin Luther King, Jr., holiday a “Day of UtilityService”. The National Day of Utility Service is organizedby NARUC.December 6 Commission announces the formation of aspeaker’s bureau, another program designed to helpconsumers better understand the role and responsibilitiesof the Commission.December Commission opens case to investigate tariffprovisions governing limitations of liabilities for publicutility operations.2012January 25 Commission establishes working case regardingrenewable energy standards rules.February 3 Ameren Missouri files an electric rate casewith the Commission seeking to increase annual electricoperating revenues by approximately $375.6 million.February 5 Commission Chairman Kevin Gunn is honoredby NARUC, receiving the inaugural Barnich Award,recognizing the ongoing commitment of NARUC membersto furthering regulatory best practices around the world.February 2 Kansas City Power & Light Company files anelectric rate case with the Commission seeking to increaseannual electric operating revenues by approximately$105.7 million.February 2 KCP&L Greater Missouri Operations Companyfiles an electric rate case with the Commission seekingto increase annual electric operating revenues byapproximately $83.5 million.February 29 Commission approves agreement whichauthorizes the merger of Sigma Acquisition Corporation,Southern Union Company d/b/a Missouri Gas Energy andEnergy Transfer Equity, L.P.March Commission approves agreement which authorizesMissouri-American Water Company to increase annualwater operating revenues by approximately $23.2 millionand annual sewer operating revenues by approximately$725,000. When Missouri-American filed its rate requestson June 30, 2011, it sought to increase annual operatingrevenues for water and sewer service by approximately$42.9 million.March 4 Commission approves agreement which authorizesAtmos Energy Corporation to sell its Missouri natural gasand natural gas transportation systems to Liberty Energy(Midstates) Corp.April Commission observes National Safe Digging Month,promoting “Call Before You Dig”.April 5 Commission holds “Utility Days” in Kansas City.“Utility Days” are designed to provide the public withinformation and education in a “one-stop-shop” setting.28 PSC Annual Report

STATISTICAL INFORMATIONRATE CASE DECISIONS DURINGFISCAL YEAR 22ELECTRICDate ofOrder Case No. Company Rate Request PSC Decision7/13/11 ER-2011-0028 Ameren Missouri $263,000,000 $172,000,000STEAMDate ofOrder Case No. Company Rate Request PSC Decision10/12/11 HR-2011-0241 Veolia Energy Kansas City, Inc. $1,379,200 $1,379,200WATER & SEWER RATE CASESCase Effective Increase IncreaseNumber Company Date Requested GrantedSR-2011-0182 TBJ Sewer Systems, Inc. 9/2/11 $8,941 $9,055WR-2011-0337 Missouri-American Water Company 4/1/12 $42,900,000 $24,000,000SR-2011-0338 Missouri-American Water Company 4/1/12WR-2012-0031 Midland Water Company 1/27/12 $9,200 $5,633WR-2012-0163 Taney County Water Company 6/15/12 $49,000 $42,468SR-2012-0263 R.D. Sewer Company L.L.C. Pending $10,380 PendingWR-2012-0266 Lakeland Heights Water Company, Inc. Pending $3,960 PendingWR-2012-0267 Oakbrier Water Company, Inc. Pending $2,160 PendingWR-2012-0300 Empire District Electric Company-Water Pending $516,401 PendingSR-2012-0309 Meramec Sewer Company Pending $140,000 PendingSR-2012-0399 House Springs Sewer Company Pending $125,000 PendingWR-2012-0405 Raytown Water Company Pending $426,951 PendingPSC Annual Report 29

STATISTICSNATURAL GAS UTILITIES STATISTICSCalendar Year 2 (Missouri JurisdictionalOperating Mcfs Residential TotalName of Company Revenues Sold Customers CustomersAtmos Energy Corporation $ 53,139,414 8,696,983 48,900 55,890Empire District Gas Company, The $ 45,984,065 8,492,804 38,051 43,488Laclede Gas Company $ 767,410,001 82,160,116 597,549 638,714Missouri Gas Energy (1) $ 586,312,946 73,108,529 440,361 501,499Missouri Gas Utility, Inc. (2) $ 3,725,826 321,264 2,395 2,484Southern Missouri Natural Gas (3) $ 10,471,054 1,360,925 5,344 8,078Ameren Missouri (4) $ 156,462,307 16,151,948 113,443 126,675Totals: $1,623,505,612 190,292,569 1,246,043 1,376,828Source: MoPSC FERC Form 2, 2011 Annual Reports (Missouri Jurisdictional)Notes:(1) a division of Southern Union Company(2) a subsidiary of Summit Utilities, Inc.(3) Southern Missouri Gas Company, L.P. d/b/a(4) Union Electric Company d/b/aELECTRIC UTILITIES STATISTICSCalendar Year 2 (Missouri JurisdictionalOperating MWhs Residential TotalName of Company Revenues Sold Customers CustomersEmpire District Electric Company, The $1,418,956,494 4,142,915 123,756 147,219Kansas City Power & Light Company $1,703,138,524 8,747,837 239,105 271,446KCP&L Greater Missouri Operations Company-L&P $1,168,964,002 2,147,684 58,018 65,833KCP&L Greater Missouri Operations Company-MPS $1,555,584,148 6,047,062 215,900 246,851Ameren Missouri (1) $2,809,322,426 37,428,457 1,034,548 1,190,478Totals: $4,655,965,594 58,513,955 1,671,327 1,921,827Source: MoPSC FERC Form 1, 2011 Annual Reports (Missouri Jurisdictional)(1) Union Electric Company d/b/aSTEAM STATISTICSCalendar Year 2 (Missouri JurisdictionalOperating MMBtus Residential TotalName of Company Revenues Sold Customers CustomersKCP&L Greater Missouri Operations Company $16,025,501 2,522,200 0 5Veolia Energy Kansas City, Inc. $19,640,246 1,706,699 0 58Totals: $35,665,747 4,228,899 0 63Source: 2011 Annual Report3 PSC Annual Report

STATISTICSSTAND ALONE WATER AND SEWER COMPANIES*CALENDAR YEAR 2Name of Water Company Customers Name of Sewer Company CustomersArgyle Estates Water System 52 Cannon Home Association 105Bilyeu Water Company 54 Central Rivers Wastewater Utility, Inc. 228Empire District Electric Co. 4,579 EMC of St. Charles 20Environmental Utilities 21 House Springs Sewer Co. 1,178Evergreen Lake Water Co. 60 M.P.B. Inc. 195Franklin County Water Co. 184 Meramec Sewer Co. 992Gascony Water Co., Inc. 170 Mid MO Sanitation 28I H Utilities 708 Mill Creek Sewer Co. (1) 75Kimberling City Water Company 94 North Oak Sewer 76Lakeland Heights Water 105 P.C.B. Inc. 285Middlefork Water Co. ** 2 RD Sewer Co. 164Midland Water Co. 96 Taney County Utilities Corp. 73Moore Bend Water Co. (2) 88 Taneycomo Highlands 29Noel Water Co. 658 TBJ Sewer Systems, Inc. 59Oakbrier Water Co. 60 Timber Creek Sewer Co. 1,614Ozark Shores Water Co. 1,856 Village Water & Sewer 239Public Funding Corp of Ozark 216 Warren County Sewer Co. 35Raytown Water Co. 6,508 West 16th Street 148Rex Deffenderfer Enterprises Inc. 1,102 WPC Sewer Co. 68Riverfork Water Co. 143Spokane Highlands Water Co. 48 Total Number of Customers 5,6Stockton Hills Water Co. 161Smithview H20 Co. 153Taney County Water Co. 476Tri State Utility Co. 3,468Village Greens Water Co. 60Whispering Hills Water Co. 41Whiteside Hidden Acres, LLC 39Woodland Manor Water Co. 163Total Number of Customers 2,365*Active Companies as of 8/1/12. Customer numbers based on most recent data available.**Middlefork Water Company provides water to Grant City and Standberry, which buy the water wholesale toprovide to approximately 2,100 customers.(1) Operating Under Receivership(2) Sale/Transfer PendingPSC Annual Report 3

STATISTICSCOMBINATION WATER AND SEWER COMPANIES*CALENDAR YEAR 2Company Name Water Customers Sewer CustomersBrandco Investments 190 190Calvey Brook 0 0Emerald Pointe Utility Co. 380 376Envirowater 0 0Foxfire 310 213Gladlo Water & Sewer Co. (1) 63 64Hickory Hills Water & Sewer Co.(1) 49 49Highway H Utilities, Inc. 839 283Holtgrewe Farms Water Co. LLC 0 0Lake Northwoods Utility Co. 20 20Lake Region Water and Sewer Co. 646 772Liberty Utilities 1,448 445Missouri American Water Co. 449,941 3,236Missouri Utilities Co. (1) 155 130Osage Water Co. (1) 418 386Peaceful Valley Service Co. 166 166Port Perry Service Co. 292 175Rogue Creek Utilities (1) 98 98Roy L Utilities, Inc. 62 57S K & M Water & Sewer Co. 276 152Seges Mobile Home Park 59 59Southtown Utilities Co., Inc. 108 108Terre Du Lac Utilities Corp. 1,261 1,245Valley Woods Water Co. 40 32Willows Utility Co. 181 185Total Number of Customers 45,2 8,44*Active Companies as of 8/1/12. Customer numbers based on most recent data available.(1) Operating Under Receivership(2) Sale/Transfer Pending32 PSC Annual Report

PSC COMMISSIONERS PAST AND PRESENTCOMMISSIONERLENGTH OF SERVICEJohn M. Atkinson 1913-1916William F. Woerner 1913-1914John Kennish 1913-1917; 1920Frank A. Wightman 1913-1915Howard B. Shaw 1913-1917Edwin J. Bean 1914-1925Eugene McQuillin 1915-1917William G. Busby 1916-1921David E. Blair 1917-1920Noah W. Simpson 1917-1923Edward Flad 1917-1921John A. Kurtz 1920-1923Hugh McIndoe 1921-1923A.J. O’Reilly 1921-1925Richard H. Musser 1923-1925Merrill E. Otis 1923-1924Thomas J. Brown 1923-1928D.E. Calfee 1925-1929Almon Ing 1925-1933S.M. Hutchinson 1925-1931J.H. Porter 1925-1933James P. Painter 1928-1929Milton R. Stahl 1929-1933J. Fred Hull 1929-1934George H. English 1931-1936J.C. Collet 1933-1935William Stoecker 1933-1936W.M. Anderson 1933-1938Harry E. McPherson 1934-1935Sam O. Hargus 1935-1937John S. Boyer 1935-1941Albert D. Nortoni 1936-1938John A. Ferguson 1936-1944J.D. James 1937-1942Marion S. Francis 1938-1941Scott Wilson 1938-1941Paul Van Osdol 1941-1943Frederick Stueck 1941-1943Kyle Williams 1941-1952Charles L. Henson 1942-1959Albert Miller 1943-1944Richard Arens 1944-1945Agnes Mae Wilson 1943-1949E.L. McClintock 1945-1967Morris E. Osburn 1945-1952John P. Randolph 1949-1951Henry McKay Cary 1950-1955Maurice Covert 1952-1953Tyre W. Burton 1952-1965COMMISSIONERLENGTH OF SERVICEFrank Collier 1953-1954M.J. McQueen 1954-1956D.D. McDonald 1955-1961William Barton 1956-1965Frank J. Iuen 1959-1963Frank W. May 1961-1967Donal D. Guffey 1963-1968William R. Clark 1965-1975Charles J. Fain 1965-1977Howard Elliot, Jr. 1967-1970Marvin E. Jones 1967-1973Willard D. Reine 1968-1975James F. Mauze 1971-1975A. Robert Pierce, Jr. 1973-1977James P. Mulvaney 1975-1977Stephen B. Jones 1975-1979Hugh A. Sprague 1975-1979Charles J. Fraas 1977-1983Leah Brock McCartney 1977-1983Alberta Slavin 1977-1981Stephanie Bryant 1979-1981Larry W. Dority 1979-1983John C. Shapleigh 1981-1984Charlotte Musgrave 1981-1988Allan G. Mueller 1983-1996Connie Hendren 1983-1989James M. Fischer 1984-1989William D. Steinmeier 1984-1992David Rauch 1989-1993Kenneth McClure 1990-1997Ruby Letsch-Roderique 1990-1991Patricia Perkins 1991-1995Duncan Kincheloe 1992-1997Harold Crumpton 1993-2000M. Dianne Drainer 1995-2001Karl Zobrist 1996-1997Robert Schemenauer 1998-2001Sheila Lumpe 1997-2003Connie Murray 1997-2009Kelvin Simmons 2000-2003Bryan Forbis 2001-2003Steve Gaw 2001-2007Linward “Lin” Appling 2004-2008Robert Clayton III 2003-2011Jeff Davis 2004-2011Terry Jarrett2-presentKevin Gunn28-presentRobert S. Kenney29-presentStephen M. Stoll22-presentPSC Annual Report 33

CONTACTING THE PSCMissouri Public Service Commission offices are located in Kansas City, Jefferson City and St.Louis. The PSC is open from 8:00-12:00 noon and 1:00-5:00 p.m., Monday through Friday,except on state holidays.Jefferson City:St. Louis:Kansas City:Missouri Public Service CommissionGovernor Office Building200 Madison Street(Mailing Address: P.O. Box 360)Jefferson City, MO 65102Toll-free Consumer Hotline forComplaints: (8 392-42Manufactured Housing/Modular UnitComplaints: (8 89-38Other Business: (573) 751-3234Fax: (573) 751-1847Missouri Public Service Commission111 North 7th Street, Suite 105St. Louis, MO 63101Telephone No.: (314) 340-4700Fax: (314) 340-4725Missouri Public Service CommissionFletcher Daniels State Office Building615 E. 13th StreetKansas City, MO 64106Telephone No.: (816) 889-3946Fax: (816) 889-3957Web site address: www.psc.mo.gov34 PSC Annual Report

PUBLIC SERVICE COMMISSION OF THE STATE OF MISSOURIwww.psc.mo.gov(800) 392-4211