Missouri regulators consider AmerenUE's $320 million rate case

Tuesday, March 16, 2010

JEFFERSON CITY, Mo. -- Customers of Missouri's largest electricity provider appear likely to see a rate increase. The biggest question is how much more they will pay.

State utility regulators began hearing testimony Monday on a rate increase sought by St. Louis-based AmerenUE, most of whose 1.2 million customers are in eastern and central Missouri.

AmerenUE wants the Missouri Public Service Commission to grant a $320 million rate increase to make reliability improvements such as putting wires underground and trimming trees, to cover rising fuel prices and for other expenses. The utility initially had sought a roughly $400 million rate increase last July.

Regulatory staff and advocates for consumers, businesses and senior citizens have suggested smaller electric rate increases, which could be as low as $129 million. Staff for the Missouri Public Service Commission said it agrees the utility is entitled to a rate increase but that AmerenUE is asking for too much and should instead be granted a $155 million increase.

The electric rate increases could take effect this summer.

AmerenUE, a subsidiary of Ameren Corp., has acknowledged that higher electricity prices could be difficult for some because of the economic downturn, but the utility said customers still expect reliable power and that projects to improve reliability cost money.

Ameren attorney Jim Lowery said the utility has worked to help customers deal with higher electric prices and that its rates remain low.

"There's no good time to ask for a rate increase or for you to have decide a rate increase request," Lowery said. "Some of the company's customers are hurting -- 50 cents a day, even that matters to them. ... This company has taken and is taking steps it can to mitigate rate increases."

It is the third time since 2007 that AmerenUE has asked to raise electric rates. Warner Baxter, the utility's president and CEO, testified Monday that AmerenUE also plans to file another rate case later this year. Baxter declined to comment about the amount for that proposed case when asked by The Associated Press because of the ongoing rate case.

In January 2009, the Public Service Commission approved a $163 million rate increase for AmerenUE. In 2007, Ameren was granted a $43 million increase, which was a fraction of the $361 million it requested at that time.

Critics of AmerenUE's requested rate increase warned that it could hamper Missouri's economy.

The Missouri Industrial Energy Consumers, an organization for businesses, warned regulators that too large a rate increase could cost the state jobs. The group said the adverse effects of electric prices could be felt particularly hard by Noranda Aluminum Inc., an aluminum smelter in New Madrid that is AmerenUE's largest customer and receives a discount for the power it uses.

"Your decision in this case could have a profound impact on Missouri's economic future," said Diana Vuylsteke, an attorney representing Missouri Industrial Energy Consumers. "It could make the difference in whether a Missouri manufacturing plant stays open or shuts its doors forever."

Concern over the potential rate increase prompted customers to flock to local public hearings held by the Public Service Commission throughout eastern and central Missouri to accept testimony from AmerenUE's customers.

A coalition of businesses and senior groups has organized opposition to a proposed increase in electric rates and urged consumers to speak out against requested rate increase.

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