Securitization

Important account update for Missouri electric customers

Beginning in March 2024, customers will see a new line item on their bill called “February 2021 Storm and Asbury Costs.” For most of our rate classes, including our residential class, this charge of approximately 1 cent per kWh of energy usage beginning March 1 is to primarily recover approximately $305 million in costs incurred because of the 2021 extreme weather event called Winter Storm Uri and the Asbury generation plant that was removed from service after 50 years.

The Missouri Public Service Commission (MPSC) authorized Liberty to use a financing mechanism called securitization to help lessen the financial impact associated with the recovery of these costs, which were incurred by the Company to benefit customers. The utilization of securitization saves Liberty customers approximately $32 million compared to its traditional recovery method.

Rate Classes and Charges for February 2021 Storm and Asbury Costs
Secondary Voltage – takes service up to 480 volts Applicable rate classes: Non-Standard Residential (NS-RG), Time Choice Residential (TC-RG), Time Choice Plus Residential (TP-RG), Residential (RG), Residential Pilot (RGL), Non-Standard General Service (NS-GS), Time Choice Plus General Service (TP-GS),Non-Standard Large General Service (NS-LG), Time Choice Large General Service (TC-LG), Municipal Street Lighting Service (SPL), Private Lighting Service (PL), Special Lighting Service (LS), Net Metering (NM), LED Street Lighting and Municipal Street Lighting LED	$.010474 per kWh
Primary Voltage – takes service between 2.4 and 34 kV Applicable rate classes: Non-Standard Small Primary (NS-SP), Time Choice Small Primary (TC-SP) and Large Power Service (LP)	$.010280 per kWh
Transmission Customers – takes service at 34.5 kV and above Applicable rate classes: Transmission Service (TS)	$.010065 per kWh

How securitization works

Missouri lawmakers passed legislation in 2021 allowing utilities to use a financing tool called securitization to address extraordinary costs from extraordinary weather events and energy transition costs due to power plant retirements. Using securitization saves money for customers by allowing a utility to recover its qualifying costs at a lower rate than its traditional financing approach. You can think of this like refinancing a home mortgage from a higher rate to a lower rate.

Why is Liberty using securitization?

Between February 13 and February 20, 2021, three severe winter storms swept across the United States, including Winter Storm Uri. These storms resulted in more than 170 million Americans being placed under various winter weather alerts issued by the National Weather Service. More than 9.9 million people in the U.S. and Mexico experienced blackouts. Prolonged bitter cold created record-setting energy demand for utilities across the Midwest, impacting fuel availability and causing then-extraordinary natural gas price spikes. Winter Storm Uri, a roughly week-long event, resulted in more than $220 million in storm-related costs for Liberty, primarily fuel costs.

Frequently Asked Questions

How do Liberty customers benefit from securitization?

Liberty can lessen the impact to customers and keep energy affordable by using this tool to finance the extraordinary costs associated with the response to Winter Storm Uri, as well as costs associated with the Asbury power plant.

How does securitization work?

Like refinancing a home mortgage from a higher rate to a lower rate, a utility can use securitization to recover its qualifying costs at a lower interest rate than its traditional financing approach.

How much will this impact my bill?

Missouri electric customers will see a new line item on their bill called “February 2021 Storm and Asbury Costs” for energy usage beginning March 1, 2024. The bill impact is approximately 1 cent per kWh. See chart above for specific charges.

How long will this line item appear on customer bills?

Customers will see this line item on their bill for approximately 13 years.

Why can’t you use securitization for other investments?

In Missouri, utilities are limited to using securitization for costs related to extraordinary weather events and energy transitions costs associated with power plant retirements.

Where can I find additional information about rates?

For additional information about rates, visit https://central.libertyutilities.com/all/residential/rates/mo-electric-rates.html.

Keeping energy affordable for customers

Typically, fuel costs are passed directly to customers, with no mark-up or profit to Liberty, through what is called the Fuel Adjustment Clause (FAC). The FAC is adjusted every six months. Flowing these extraordinary storm costs through the FAC would have resulted in a 62% increase for a six-month period for a typical residential customer using 1000 kilowatt-hours of usage per month.

To lessen the impact to customers and keep energy affordable, Liberty requested and received approval from the MPSC to, instead, use securitization to spread the Storm Uri costs over a 13-year period, saving customers approximately $18.4 million.

In addition, Liberty chose to use the same securitization financing mechanism for costs associated with the retirement of its Asbury power plant that served customers for 50 years. Click here to learn more about Asbury and its next chapter. Customer savings of approximately $13.3 million are the result of using securitization for the qualifying Asbury costs.

What this means for customers

Beginning in March 2024, customers will see a new line item on their bill called “February 2021 Storm and Asbury Costs”. The charge for residential customers is $.010474 per kWh of energy usage or approximately $10 per month for the average residential customers using approximately 1000 kWh per month.

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