PSC approves new rate plan for Missouri utilities

Saturday, September 23, 2006

JEFFERSON CITY, Mo. -- The Missouri Public Service Commission on Thursday approved a plan to give electric companies the right to seek rate increases when their fuel costs increase.

Utilities have always been able to seek general rate increases. But the new plan, approved on a 3-2 vote, allows electric companies to seek specific rate adjustments when their fuel costs rise or fall.

The commission opted against a proposal that would have capped the amount of the rate increase that utilities could seek.

The new fuel adjustment rule was backed by chairman Jeff Davis, who said capping increases would have worked against consumers because some companies would increase rates as much as a cap allowed.

"It's better to leave some uncertainty," Davis told the St. Louis Post-Dispatch.

Consumer groups said the new rule lacked protection against excessive rate hikes.

"It's a sad day for consumers," said John Coffman, president of the Consumers Council of Missouri. He is also a lawyer representing the AARP.

Coffman told the Post-Dispatch that the new rule would mean higher costs for consumers on their monthly electric bills.

Rates, however, won't increase immediately. Electric companies first have to go before the commission and seek a general rate increase. Once they get the commission's approval, they can increase rates when fuel costs go up.

AmerenUE, Missouri's biggest electric company, said the change was needed to help it quickly recoup the cost of higher fuel costs.

But consumer and business groups said the action would lead to higher rates at AmerenUE, a company they claim already earns too much.

"Our primary concern is that even utilities earning excessive profits are still entitled to the [fuel adjustment] surcharge," said Diana Vuylsteke, a lawyer with Bryan Cave, who represents some of the area's largest industrial companies.

She said the new rules are a major change in the state's regulation of utilities: "We are disappointed that we don't see any protections in the rule."

Her clients include Anheuser-Busch, Boeing, DaimlerChrysler, Doe Run, Enbridge, General Motors, Hussmann, J.W. Aluminum, MEMC Electronic Materials, Monsanto, Pfizer, Precoat Metals, Procter & Gamble, Nestle Purina and Solutia.

AmerenUE insists its rates are too low, and the company is seeking a general rate increase of nearly 18 percent.

AmerenUE spokeswoman Susan Gallagher said the company had no comment on Thursday's action. She said the company had not read the final version of the new rules. The company pushed hard in negotiations with the commission for a version that contained much the same language as the final version.

Gallagher said that earlier version contained "many" protections for consumers, including oversight by the commission.

Voting with Davis for the fuel adjustment clause were commissioners Lin Appling and Connie Murray. Commissioners Robert Clayton and Steve Gaw voted "no."

The governor appoints the commissioners, who receive a state salary of about $99,000.

Information from: St. Louis Post-Dispatch,

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