PURPOSE: This rule prescribes the requirements and prohibitions for HVAC services to be conducted by regulated electrical corporations, gas corporations, and heating companies (covered utilities) and describes the circumstances when such covered utilities may have an affiliate engaging in HVAC services as set forth in sections 386.752, 386.754, 386.756, 386.760, 386.762, and 386.764, RSMo.

1. (1) Definitions.

   1. (A) Affiliated entity means any entity not regulated by the Public Service Commission (commission) which is owned, controlled by or under common control with a covered utility and is engaged in HVAC services.
   2. (B) 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 (1) 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 more than ten percent (10%) of voting securities or partnership interest of an entity confers control for purposes of this rule. This provision, however, shall not be construed to prohibit a covered utility from rebutting the presumption that its ownership interest in an entity confers control.
   3. (C) Covered utility means an electrical corporation, gas corporation, or heating company as defined in section 386.020, RSMo, subject to commission regulation pursuant to Chapters 386 and 393, RSMo, and covered by this rule.
   4. (D) 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 to produce a good or service. Costs are assigned either through a direct or allocated approach. Costs that cannot be directly assigned or indirectly charged or assigned (e.g., general and administrative) must also be included in the FDC calculation through a general allocation.
   5. (E) HVAC services means the warranty, sale, lease, rental, installation, construction, modernization, retrofit, maintenance, or repair of heating, ventilating, and air conditioning (HVAC) equipment.
   6. (F) Utility contractor means a person, including an individual, corporation, firm, incorporated or unincorporated association, or other business or legal entity, that contracts with a covered utility to engage in or assist any entity engaging in HVAC services, but does not include employees of a covered utility.

2. (2) Standards.

   1. (A) A covered utility may not engage in HVAC services, except in accordance with section 386.756, RSMo, or as provided in subsection (2)(G) or (2)(H) of this rule.

   2. (B) In addition to the prohibition in (2)(A) above, no affiliated entity of a utility or a utility contractor may use any vehicles, service tools, instruments, employees, or any other covered utility’s assets, the cost of which are recoverable in the regulated rates for a covered utility service, to engage in HVAC services unless the covered utility is compensated for the use of such assets at the FDC to the covered utility.

      1. 1. The determination of a covered utility’s cost in this

section is defined in subsection (1)(D) of this rule.

1. (C) A covered utility may not use or allow any affiliated entity or utility contractor to use the name of such covered utility to engage in HVAC services unless the covered utility, affiliated entity, or utility contractor discloses, in plain view and in bold type on the same page as the name is used on all advertisements or in plain audible language during all solicitations of such services, a disclaimer that states the services provided are not regulated by the commission.
2. (D) A covered utility may not engage in or assist any affiliated entity or utility contractor in engaging in HVAC services in a manner that subsidizes the activities of such covered utility, affiliated entity, or utility contractor to the extent of changing the rates or charges for the covered utility’s services above or below the rates or charges that would be in effect if the covered utility were not engaged in or assisting any affiliated entity or utility contractor in engaging in such activities.
3. (E) Any affiliated entities or utility contractors engaged in HVAC services shall maintain accounts, books, and records separate and distinct from the covered utility’s regulated operations.
4. (F) The provisions of this rule shall apply to any affiliated entity or utility contractor engaged in HVAC services that is owned, controlled, or under common control with a covered utility providing regulated services in the state of Missouri or any other state.

5. (G) A covered utility engaging in HVAC services in the state of Missouri five (5) years prior to August 28, 1998, may continue providing, to existing as well as new customers, the same type of services as those provided by the covered utility five (5) years prior to August 28, 1998.

   1. 1. To qualify for this exemption, the covered utility shall

file a pleading before the commission for approval.

1. A. The commission may establish a case to determine if

the covered utility qualifies for an exemption under this rule.

1. (H) The provisions of this section shall not be construed to prohibit a covered utility from providing emergency service, providing any service required by law, or providing a program pursuant to an existing tariff, rule, or order of the commission.

1. (3) Covered utilities shall develop a written qualification process for all utility contractors engaged in HVAC services and shall advertise bid opportunities to all such qualified contractors.

   1. (A) The qualification process referred to above shall be established and in use no later than August 28, 2026.

      1. 1. Covered utilities shall file notification with the

commission when they have achieved compliance with section 386.756, RSMo, including a detailed description of the qualification process.

1. 2. The qualification process shall be posted on the covered

utility’s website accessible to any interested person or company.

1. 3. Covered utilities shall file a notification with the

commission not less than thirty (30) days prior to substantive process or website changes.

1. 4. The qualification process shall clearly document the

most recent revision date.

1. (B) In addition to any alternative application processes, covered utilities shall maintain an online application process to become a qualified contractor which must be available to be accessed via the covered utility’s website.

1. (4) The commission may grant a temporary variance from any portion of this rule upon written application from a utility, for good cause. Such a variance may not conflict with any portion of sections 386.752 to 386.764, RSMo.
2. (5) All submissions of any information alleging any violations of sections 386.754 to 386.764, RSMo, and the processing of any commission cases in relation thereto, shall follow the provisions of 20 CSR 4240, Chapter 2, as applicable.

AUTHORITY: section 393.140, RSMo 2016, and section 386.760, RSMo Supp. 2025.* Original rule filed Sept. 25, 2024, effective May 30, 2025. Amended: Filed Aug. 28, 2025, effective April 30, 2026. *Original authority: 386.760, RSMo 1998, amended 2025, and 393.140, RSMo 1939, amended 1949, 1967.