Missouri Code of State Regulations › Title 20 - DEPARTMENT OF COMMERCE AND INSURANCE › Division 4240 - Public Service Commission › Chapter 20 - Electric Utilities › Section 20 CSR 4240-20.015 - Affiliate Transactions

Current through Register Vol. 49, No. 14, July 15, 2024
PURPOSE: This rule is intended to prevent regulated
				  utilities from subsidizing their non-regulated operations. In order to
				  accomplish this objective, the rule sets forth financial standards, evidentiary
				  standards and record-keeping requirements applicable to any Missouri Public
				  Service Commission (commission) regulated electrical corporation whenever such
				  corporation participates in transactions with any affiliated entity (except
				  with regard to HVAC services as defined in section
				  386.754, RSMo Supp.
				  1998, by the General Assembly of Missouri). The rule and its effective
				  enforcement will provide the public the assurance that their rates are not
				  adversely impacted by the utilities' nonregulated activities.
(1) Definitions.
(A) Affiliated entity means any person,
				including an individual, corporation, service company, corporate subsidiary,
				firm, partnership, incorporated or unincorporated association, political
				subdivision including a public utility district, city, town, county, or a
				combination of political subdivisions, which directly or indirectly, through
				one (1) or more intermediaries, controls, is controlled by, or is under common
				control with the regulated electrical corporation.
(B) Affiliate transaction means any
				transaction for the provision, purchase or sale of any information, asset,
				product or service, or portion of any product or service, between a regulated
				electrical corporation and an affiliated entity, and shall include all
				transactions carried out between any unregulated business operation of a
				regulated electrical corporation and the regulated business operations of a
				electrical corporation. An affiliate transaction for the purposes of this rule
				excludes heating, ventilating and air conditioning (HVAC) services as defined
				in section
				386.754 by the
				General Assembly of Missouri.
(C)
				Control (including the terms "controlling," "controlled by," and "common
				control") means the possession, directly or indirectly, of the power to direct,
				or to cause the direction of the management or policies of an entity, whether
				such power is exercised through one (1) or more intermediary entities, or
				alone, or in conjunction with, or pursuant to an agreement with, one or more
				other entities, whether such power is exercised through a majority or minority
				ownership or voting of securities, common directors, officers or stockholders,
				voting trusts, holding trusts, affiliated entities, contract or any other
				direct or indirect means. The commission shall presume that the beneficial
				ownership of ten percent (10%) or more of voting securities or partnership
				interest of an entity constitutes control for purposes of this rule. This
				provision, however, shall not be construed to prohibit a regulated electrical
				corporation from rebutting the presumption that its ownership interest in an
				entity confers control.
(D)
				Corporate support means joint corporate oversight, governance, support systems
				and personnel, involving payroll, shareholder services, financial reporting,
				human resources, employee records, pension management, legal services, and
				research and development activities.
(E) Derivatives means a financial instrument,
				traded on or off an exchange, the price of which is directly dependent upon
				(i.e., "derived from") the value of one or more underlying securities, equity
				indices, debt instruments, commodities, other derivative instruments, or any
				agreed-upon pricing index or arrangement (e.g., the movement over time of the
				Consumer Price Index or freight rates). Derivatives involve the trading of
				rights or obligations based on the underlying product, but do not directly
				transfer property. They are used to hedge risk or to exchange a floating rate
				of return for a fixed rate of return.
(F) Fully distributed cost (FDC) means a
				methodology that examines all costs of an enterprise in relation to all the
				goods and services that are produced. FDC requires recognition of all costs
				incurred directly or indirectly used to produce a good or service. Costs are
				assigned either through a direct or allocated approach. Costs that cannot be
				directly assigned or indirectly allocated (e.g., general and administrative)
				must also be included in the FDC calculation through a general
				allocation.
(G) Information means
				any data obtained by a regulated electrical corporation that is not obtainable
				by nonaffiliated entities or can only be obtained at a competitively
				prohibitive cost in either time or resources.
(H) Preferential service means information or
				treatment or actions by the regulated electrical corporation which places the
				affiliated entity at an unfair advantage over its competitors.
(I) Regulated electrical corporation means
				every electrical corporation as defined in section
				386.020, RSMo,
				subject to commission regulation pursuant to Chapter 393, RSMo.
(J) Unfair advantage means an advantage that
				cannot be obtained by nonaffiliated entities or can only be obtained at a
				competitively prohibitive cost in either time or resources.
(K) Variance means an exemption granted by
				the commission from any applicable standard required pursuant to this
				rule.