Residents get say on utility request

Wednesday, January 3, 2007

AmerenUE's biggest electricity customers have had their say on the utility's request for a rate increase. Now it is the public's turn.

At 5:30 p.m. Thursday, the Missouri Public Service Commission will hold simultaneous public hearings in Cape Girardeau and Dexter, Mo., on Ameren's request to charge customers a total of $360.7 million more annually for electricity. The Cape Girardeau hearing will be held in Glenn Auditorium at Dempster Hall on the Southeast Missouri State University campus. In Dexter the meeting will be held in the ITV Room of the Dexter Armory, 1702 Highway 114 East.

Both locations will be plugged into a single video conference, said Kevin Kelly, PSC spokesman. The first half-hour of the event will be open for questions from the public, alternating between the two locations, to provide information about the Ameren rate request. A period for the public to take a stand on Ameren's rate request will follow.

Some of Ameren's biggest customers, including local industrial users Buzzi Unicem USA, BioKyowa Inc. and Procter & Gamble, have joined groups that have intervened to oppose all or parts of the rate increase.

Following an audit of Ameren's books, the PSC staff filed a complaint Friday recommending that the utility's annual electric revenue be cut by from $136 million to $168 million.

At the hearing Cape Gir-ardeau Mayor Jay Knudtson will urge the PSC to consider how the proposed rate increases will impact employers, residential users and the city as well, city manager Doug Leslie said. If the PSC gives Ameren the full rate increase it is seeking, Leslie said, the city will pay an additional $175,000 annually in utility costs.

The city expects a 24 percent rate increase if the PSC approves Ameren's request. The rate request sets different levels of increase on the various classes of customers, ranging from 10 percent for residential users to 29 percent for large industrial customers.

A major portion of Cape Gir-ardeau's power consumption is used to provide water and sewer service, Leslie said. "We certainly want to make them aware of our concerns and concerns on behalf of our corporate and private citizens," he said.

A dispute over how much profit Ameren should be allowed is one of the biggest factors creating the wide spread between the rate increase sought by Ameren and the rate cut sought under the PSC staff complaint. Ameren is asking for a 12 percent return on investment, while the PSC staff wants to limit the return to 9.25 percent.

The rate increase, if approved, would be the first increase in electric costs for Ameren customers since 1987. Since that time, rates have been cut by 13 percent, giving Missouri customers of Ameren rates that are 37 percent below the national average, Ameren spokesman Michael Cleary said.

Since 2002, when the rates were cut 6 percent, Ameren's annual investment in energy infrastructure has risen 50 percent, while costs for fuel and other materials used to produce power have increased from 40 to 145 percent, Cleary said.

"The need for a rate increase is well established in our regulatory filings," Cleary said.

But those filings have been disputed by large customers, who have been allowed to intervene in the case to gain a larger voice in the rate decision.

In testimony delivered Dec. 15, Billie Sue LaConte, an expert testifying for the Missouri Energy Group, told the PSC that 12 percent return is excessive. The Missouri Energy Group represents Buzzi Unicem Inc. as well as major St. Louis hospitals.

Limiting the increase on residential users to spare them the true cost of a rate increase is unfair to other users, LaConte said. "As it is, AmerenUE is being generous with the money of its other customers -- including schools, not-for-profit agencies, nursing homes and other customers who themselves face budgetary constraints. AmerenUE is willing to have other customers share the pain of rising costs, but appears unwilling to do so itself."

The Missouri Industrial Energy Group, representing some of the state's biggest industrial customers, said in testimony delivered Dec. 15 that Ameren is understating its potential for raising revenue by selling excess power on the open market and overstating the likely costs of the fuel needed to produce that power.

335-6611, extension 126

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