JEFFERSON CITY, Mo. – The Missouri Senate has passed a wide-ranging utility bill that could change the way that utility rates are set.

Senate Bill 4, sponsored by Missouri State Sen. Mike Cierport (R-Jackson County), would allow utility companies to set rates based on future projected costs and revenues rather than actual costs.

According to the bill’s language, utilities could adopt a “future test year” for setting rates, meaning they could adjust customer rates based on anticipated expenses in infrastructure investments and operational costs, as long as the Missouri Public Service Commission approves.

Over time, if actual costs ended up being lower than projected costs, customers would be due for reimbursements and “the portion of the annual revenue requirement reflecting the rate base difference shall be returned to customers,” the bill states. How the reimbursement process works would remain to be determined.

The bill also includes a provisions that allows utilities to seek rate increases that include “construction work in progress” for natural-gas-generating facilities in the base rates.

While supporters argue this approach may provide a more accurate reflection of the financial needs of utility companies, critics worry it could lead to higher rates based on uncertain forecasts.

In particular, the Consumers Council of Missouri strongly opposes SB 4, arguing it could significantly raise utility bills for Missouri households struggling most with energy costs. The council estimates, based on expert projections, customers could be paying more than $1,100 per year on utility bills.

“The Senate’s approval of SB 4 is not only shocking but also endangers the health of Missourians who are struggling to make ends meet,” said CCM executive director Sandra Padgett in a statement to FOX 2.

SB 4 cleared the Missouri Senate on Monday and has already had two House readings, according to the Senate’s online bill tracker.