PURPOSE: This rule prescribes the requirements for HVAC services respecting affiliated entities and regulated electrical corporations, gas corporations, and heating companies (covered utilities) when such covered utilities participate in affiliated transactions with an HVAC affiliated entity as set forth in sections 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, whether in writing or not in writing, with a covered utility to engage in or assist any entity in 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 by an affiliated entity, or as provided in subsection (2)

3. (G) or (2)(H) of this rule.

   1. (B) No affiliated entity or 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.

AUTHORITY: sections 386.760.1 and 393.140, RSMo 2016.* Original rule filed Sept. 25, 2024, effective May 30, 2025. *Original authority: 386.760, RSMo 1998, and 393.140, RSMo 1939, amended 1949, 1967.