AmerenUE to seek rate increase

Saturday, July 25, 2009

AmerenUE will seek a rate increase from the Missouri Public Service Commission.

The St. Louis-based utility company filed an application at 2 p.m. Friday for an 18 percent increase. If approved, AmerenUE said the request would equal an increase of less than 50 cents per day for the average household, based on a residential customer who uses 1,100 kilowatt hours each month.

Company officials said half of the $402 million increase would be used to make improvements such as more frequent pole inspections and converting overhead electrical lines to underground lines, cover basic operating costs and compensate for higher financing costs.

The remainder of the request would cover rising fuel costs and lower revenue from excess power the company sells to other entities.

The commission will review the request and make a final decision in June. A public hearing is expected to take place in December or January, with formal hearings scheduled for March.

Ronald C. Zdellar, vice president of energy delivery for AmerenUE, said that the commission normally does not grant the maximum request for a rate increase. In 2008 the utility company requested 12.1 percent, or $251 million, but was granted a 7.8 percent increase, or $162 million. That became effective in March.

"We're trying to be mindful of the impact this will have on customers," Zdellar said. "That's why we've made efforts in educating customers and other efficiency programs."

While the request won't be decided until June, the company is requesting an interim rate increase of 1.7 percent, or $37 million, effective Oct. 1. This would recover some of the rising costs and reduce financing costs later on. That would in turn help minimize future rate increases.

Zdellar said another request for a rate increase could likely happen in the future.

"The rising costs are going up," he said. "It appears this is going to happen more frequently. It's a sign of the times in this economy."

Included in the request is a special provision for Noranda Aluminum in New Madrid, Mo. The aluminum plant uses seven times more electricity than the next-biggest AmerenUE customer.

Noranda will pay a set amount each month. If the plant uses less energy in a given month, then the excess power would be sold on the market and Noranda would be compensated.

Zdellar said he understands customers' concerns and reminds them that AmerenUE's electric rates are 40 percent below the national average among investor-owned utilities.

AmerenUE recently launched several residential energy-efficiency programs that include purchase incentives for energy-efficient lighting and appliances. Zdellar said this would reduced energy usage by 540 megawatts by 2025.

bblackwell@semissourian.com

388-3628

The Associated Press contributed to this report.

Pertinent address:

Cape Girardeau, MO

New Madrid, MO

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