Ameren customers to face rate increase

Sunday, May 30, 2010

JEFFFERSON CITY, Mo. -- State regulators on Friday approved a $226 million rate increase for electric customers of Missouri's largest utility, a change that means most residential customers likely will pay an estimated $9 more on their monthly bills.

The new rates for AmerenUE are expected to take effect in late June. The rate increase is the utility's third in roughly three years.

St. Louis-based AmerenUE initially sought an 18 percent, or $402 million, rate increase. The utility, a subsidiary of Ameren Corp., serves about 1.2 million customers, mainly in eastern and central Missouri.

The Public Service Commission considered the requested utility increase for the last 10 months and approved it 4-1. Commission chairman Robert Clayton was the lone dissenting vote and said in an interview that he disagreed with some elements within the rate decision, including the final dollar amount.

Commissioner Kevin Gunn said that although a $226 million rate increase might sound like a lot, the utility did not get everything it sought. He said the regulators' decision took a balanced approach.

Michael West, the manager of communications for AmerenUE, said the Public Service Commission's rate order is lengthy and the utility is reviewing it.

"We respect the PSC's decision, but currently, we're still analyzing and assessing the full order at this point," West said.

The Public Service Commission said much of the rate increase is because of higher costs for fuel that AmerenUE uses to run its power plants and for spending on new infrastructure. Regulators lowered the return on equity AmerenUE is allowed to earn from 10.6 percent -- which was approved last year -- to 10.1 percent. The utility wanted its return on equity to be set at 11.5 percent.

AmerenUE also is to spend $1 million for a new pilot program to help low-income customers.

Missouri Public Counsel Lewis Mills, who represents utility consumers before the Public Service Commission, was not available for comment Friday.

While considering the requested rate increase, Missouri regulators were bombarded by customers who attended local public hearings and pointedly questioned AmerenUE's leaders and regulators. Many warned of dire consequences that could result if their electric bills increased.

Some of the opposition was stirred by the Fair Electricity Rate Action Fund, which used radio ads and automated phone calls to whip up attendance.

Danny Pfeifer, a spokesman for the action fund -- which is a coalition of business and senior groups -- said Friday that the regulators' decision was a "victory for consumers."

"The PSC heard and responded to the voices of tens of thousands of voices of Missouri consumers and their message of not being able to afford Ameren's request," Pfeifer said.

The Consumers Council of Missouri said it was disappointed by the size of the rate increase and that the utility's allowed return on equity was not lowered further.

During the rate case, AmerenUE revised its requested rate increase to $320 million, which the utility said was needed for reliability improvements such as putting wires underground and trimming trees, to cover rising fuel prices and for other expenses.

The company's leaders acknowledged that higher electricity prices could be difficult for some because of the economic downturn, but said customers still expected reliable power. Warner Baxter, the utility's president and CEO, testified in March that AmerenUE also plans to file another rate case later this year.

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



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