Filing Requirements for Sewer Utility Applications for Certificates of Convenience and Necessity

PURPOSE: This rule sets forth requirements for applications to the commission requesting that the commission grant a certificate of convenience and necessity. As noted in the rule, additional requirements pertaining to such applications are set forth in 20 CSR 4240-2.060(1). (1) The procedures and application requirements contained herein are in addition to the requirements of 20 CSR 42402.060(1). (2) If the application is for a service area where service is currently provided by an existing sewer system, notice shall be provided to all potential customers within the designated service area within twenty (20) days after the filing of an application for a certificate of convenience and necessity. (A) The notice shall include a description of the approval being sought, proposed initial rates, an explanation that the proposed rates are subject to change pending approval of the application, the rates charged to other current customers of the buyer, and contact information for the buyer. (B) The notice shall also include instructions for submitting public comments to the commission, the commission case number, and how to track the progress of the case in the commission’s electronic filing and information system (EFIS). (C) An example of this customer notice shall be filed in the certificate of a convenience and necessity case by the purchasing applicant with any customer-specific information redacted. (3) Application for a certificate of convenience and necessity by a sewer company must include the following, if available, or be subject to dismissal if the required information is not submitted within any time period that may be established by the commission: (A) If the application is for a service area, where service is currently provided by an existing sewer system, the application shall contain the following items: 1. The legal description of the area to be certified; 2. A legible map of the proposed service area of appropriate scale and shall— A. Be created using professional mapping software, or be based on a color aerial or satellite photograph; B. Include a defined boundary of the entire service area encompassing all customers; C. Show nearby roads and highways with large and legible labels; D. Include a legend of map features for features shown on the map; E. Include all collection, storage, and treatment features of the sewer system; and F. Excludes unnecessary surveying information and detail; 3. A description of the existing collection and treatment system, including— A. Age or, if unknown, the estimated age, and a general description of the type of treatment plant (such as “oxidation ditch, constructed in 2001”); B. Age or, if unknown, the estimated age, and material of the collection system and whether the system is gravity, pressure sewer with septic tanks, or a mixture of both; C. Number of lift stations; D. Design population equivalent that the treatment system is designed to serve according to the Missouri Department of Natural Resources (DNR), number of customers presently connected, and the projected number of customers within the next five (5) years; and E. Any violations of DNR requirements within the last five (5) years; 4. A description of any proposed operation or capital improvements to the sewer system, including the reason for the improvements, estimated cost of capital improvements, and a proposed timeline for completion of the improvements that incorporates Missouri State Operating Permit (permit) requirements from DNR; 5. A description and copy of all notifications or meetings with existing customers prior to the filing of the application regarding the change in ownership— A. If the purchase was subject to a vote of customers and that vote was approved by voters, provide a copy of all customer notifications, meeting handouts, presentations, and outreach efforts, including documentation that supported the sale of the system, and a copy of the ballot language which the voters reviewed when voting for the approval to sell the system and the results of that vote; or B. If the purchase was not subject to a vote of customers, a copy of all notifications sent to customers by seller or buyer or, if unable to provide a copy of a notification, a statement indicating the notification could not be produced and reason it could not be provided; 6. An economic feasibility study with the proposed method for financing, proposed rates, service charges, and revenues and expenses during the first three (3) years of operation; 7. A rate base calculation following the commissionapproved Uniform System of Accounts (USOA) requirements with workpapers and supporting documentation for the assets to be acquired. All workpapers and supporting documents for the valuation of the sewer utility assets being acquired shall include but not be limited to the following: A. A list of all USOA accounts that are in use or expected to be in use based on the capital improvements identified in paragraph (3)(A)4.; B. The existing plant in service balance by USOA account number for each plant item; C. Copies of invoices for the original purchase, installation, and subsequent capital repairs and additions, if any; D. The current depreciation reserve for each USOA account with supporting backup calculations showing how the amounts were derived and depreciation rates used; and E. The amount of Contribution in Aid of Construction (CIAC); 8. A description of any other sewer service areas of commission-regulated companies or political subdivisions within one (1) mile of the proposed service area. If there are any customers within another service area currently being served by the system to be acquired, a list of the addresses of these customers; 9. A description of the estimated cost the buyer will incur to incorporate the seller’s sewer system customers into the buyer’s company; 10. The estimated costs to operate the system, including copies of any available support documentation, for each of the following: A. Any contracts in effect necessary for the provision of service; B. Estimated Public Service Commission assessments expense; C. DNR fees and assessments expense; D. Estimated corporate allocation/expense including a detailed explanation of how the allocations were calculated; E. Chemical expense; F. Electrical expense; G. Postage expense; H. Repair and maintenance expense; I. Testing and sampling expense: J. Mowing expense; K. Office supplies expense; L. Customer billing expense; M. Outside services expense; N. Income tax expense; and O. Any other miscellaneous expenses; 11. Financial statements, general ledgers, invoices, and billing registers for the seller’s water and/or sewer systems for the previous five (5) years; and 12. The purchasing agreement that set forth the terms of the acquisition including purchase price; and 13. Whether an acquisition premium exists and if the purchasing utility intends to seek recovery of such premium in future rates; (B) If the application is for a service area where service is not currently provided by an existing sewer system, the application shall contain the following items: AND INSURANCE 1. A description of the circumstances (economic, environmental, etc.) driving the need for service in the requested area and the facts showing that the granting of the application is required by the public convenience and necessity; 2. If there are ten (10) or more residents or landowners, the name and address of at least ten (10) proposed service area residents or landowners, or the name and address of all residents and landowners if fewer than ten (10) in the proposed service area; 3. A description of any other sewer service areas of commission-regulated companies or political subdivisions within one (1) mile of the proposed service area; 4. A report bearing the seal of a professional engineer registered in the state of Missouri, including— A. A physical description of the proposed collection and treatment system to be constructed; B. The cost of the proposed treatment system and the cost of alternative treatment systems examined; and C. A timeline for completion of construction, which incorporates permit requirements from DNR; 5. Projected financial details including— A. The proposed method for financing construction and the resulting capital structure; B. An economic feasibility study detailing expected revenues earned and expected expenses to be incurred during all phases of the project; C. Projected rate base over all phases of the project; D. Proposed rates charged to ratepayers over all phases of the project. If the phases of the project will continue past five (5) years, estimated rate charges for phases beyond five (5) years may be submitted; and E. Projections on customer growth over all phases of the project including the number of existing households currently utilizing an unregulated form of sewer sanitation expected to become utility customers; 6. The legal description of the area to be certificated; and 7. A legible map of the proposed service area, meeting the following requirements: A. Be created with professional mapping software, or be based on a color aerial or satellite photograph; B. Include a defined boundary of the entire service area, which encompasses all customers; C. Show nearby roads and highways with large and legible labels; D. Include a legend of the map features; and E. Include all collection, storage, and treatment features of the sewer system within the service area; and (C) If the application is for a new structure, such as construction of a new pipeline to convey sewage to a treatment facility that will not involve additional customers, the application shall contain the following items: 1. The legal description of the area to be certificated; 2. A legible map of the proposed service area, meeting the following requirements: A. Be created with professional mapping software, or be based on a color aerial or satellite photograph; B. Include defined boundaries of the entire service area(s); C. Show nearby roads and highways with large and legible labels; D. Include a legend of map features; and E. Include all collection, storage, and treatment features of the sewer system within the service area; 3. A report bearing the seal of a professional engineer registered in the state of Missouri, including— A. A detailed physical description of the feature to be constructed; B. A description of why the new features are necessary; C. The cost of the proposed feature and any of the available alternative examined; and D. A timeline for completion of construction, which incorporates permit requirements from DNR; and 4. The projected impact upon the applicant’s revenue requirements. (4) When no evidence of approval of the affected governmental bodies is necessary, a statement to that effect shall be submitted with the application. (5) When approval of the affected governmental bodies is required, evidence must be provided as follows: (A) When consent or franchise by a city or county is required, approval shall be shown by a certified copy of the document granting the consent or franchise, or an affidavit of the applicant that consent has been acquired; and (B) A certified copy of the required approval of other governmental agencies. AUTHORITY: section 386.250, RSMo 2016.* Original rule filed Oct. 2, 2024, effective May 30, 2025. *Original authority: 386.250, RSMo 1939, amended 1963, 1967, 1977, 1980, 1987, 1988, 1991, 1993, 1995, 1996.