The Missouri Public Service Commission has approved an agreement reached by parties in a case filed by the Missouri-American Water Company (MAWC) seeking an Accounting Authority Order (AAO) to govern costs and financial impacts associated with the COVID-19 pandemic.
Under the agreement, MAWC will track and defer into a separate regulatory asset, the following incremental costs directly related to the COVID-19 pandemic, beginning March 1, 2020:
• New or incremental operating and maintenance expense, limited to the following eligible costs: additional cleaning of facilities and vehicles; personal protective equipment; sanitizers; rental equipment, to include vehicles, portable hand washing stations, portable lavatories and temporary office trailers; signage related to pandemic safety and other incremental COVID- 19 related costs as agreed to by the parties or by order of the Commission.
• Increased bad debt expense to the extent total bad debt expense exceeds $2.6 million on an annual basis.
• Late payment fees waived during the moratorium period up to $785,351.
• Reconnection charges and disconnection charges waived during the moratorium period up to $783,200.
Also under the agreement:
• MAWC agrees not to defer lost revenues from reduced customer usage (volumetric charges) due to the pandemic.
• All costs and cost reductions will be tracked and deferred separately into a regulatory asset/liability until March 31, 2021. The duration of the time period may be extended or renewed upon agreement of the parties or by order of the Commission.
• Savings to be deferred: Deferred operating and maintenance cost reductions will be tracked and recorded as a regulatory liability separate from the deferred costs regulatory asset.
• Carrying costs: MAWC will not seek carrying costs on the deferred balances in this AAO case or in MAWC’s current rate case before the Commission (WR-2020-0344). MAWC will not seek carrying costs in a subsequent rate case for deferred items beyond the true-up date in WR-2020-0344.
• All parties agree that the ability to track and defer costs into a regulatory asset is for accounting purposes only. All questions regarding potential ratemaking treatment of the deferred costs and the materiality thereof are reserved for MAWC’s current rate case and a subsequent rate case for deferred items not considered for recovery in the current rate case.
Under the agreement, MAWC will make an additional $250,000 contribution to its H2O Help for Others Program prior to the end of the year. According to MAWC, the H2O Program is designed to help provide assistance to customers who would otherwise have trouble paying their bills. The program is supported by contributions from MAWC as well as voluntary contributions from customers.
MAWC provides water service to approximately 470,000 customers in Missouri. It also provides sewer service to approximately 15,000 customers in the state.