AmerenUE making case for rate increase in 2011

Monday, August 30, 2010

AmerenUE is making a case for another rate increase just two months after its last raise took effect.

The utility recently announced it will file a case with the Missouri Public Service Commission by the end of September in an effort to recoup the costs it has incurred for power system upgrades including emissions and safety controls, tree trimming and pole replacements.

"Capital improvements must be made first before we can apply for funds to recover those costs," said Lynn Barnes, vice-president of business planning and controller with AmerenUE in St. Louis. "We must borrow money to make these investments and that adds interest costs as well."

The specific amount of the increase has not yet been announced. This rate request comes just after a $226 million rate increase took effect in late June.

In the past three years, three AmerenUE has increased rates. However, Barnes said the company's rates are still 35 percent below the national average and AmerenUE has the lowest rates of any investor-owned utility in Missouri.

"The reason our rates are so low is because we use primarily coal," Barnes said.

In 2009, 76 percent of the company's fuel was coal.

But while coal is less expensive than other energy sources, there are increasing government emissions regulations that require expensive environmental control systems, Barnes said.

This fall, a new $600 million scrubber system will come online to reduce the amounts of nitrogen oxide and sulfur oxide emitted at the company's Sioux Plant near St. Louis.

Barnes said this project is the driving factor for the September rate case, which if approved wouldn't take effect until August 2011.

"Everybody screams for clean water and clean air, but there's going to be a cost for it," said Jean Mason, manager of AmerenUE's SEMO division in Cape Girardeau.

The costs AmerenUE incurred to rebuild the failed Taum Sauk reservoir may not be passed on to customers under the company's settlement with the state. But the utility hopes to recover, through higher rates, the cost of safety and security upgrades that were required to meet federal dam safety standards.

Another reason for this rate increase request is the cost AmerenUE is incurring to replace its aging infrastructure. In 2009 it replaced 2,200 poles in its system and this summer has been working to replace 4.5 miles of poles and power lines in Cape Girardeau County. The company also put in a new substation in Gordonville last year.

AmerenUE spent more than $100 million on tree trimming and repairs as a result of its reliability inspection program, Barnes said.

According to AmerenUE, the number of power outages its customers experience has dropped from 1.28 per year in 2004 to 0.98 in 2009.

Several outages experienced in the Cape Girardeau area this summer were because of weather, other construction and some of AmerenUE's own maintenance, said Jason Woodard, supervising engineer for AmerenUE's SEMO division.

"We know our customers are all hurting and nobody wants costs to go up," Barnes said.

AmerenUE, which has 1.2 million electric customers, hopes people will take advantage of its energy efficiency and weatherization programs to help reduce usage, so that while the rate may be going up, the total bill won't. More information on these programs for homes and businesses is available at www.Uefficiency.com.

Barnes said AmerenUE is taking steps to curb costs, too. It has reduced its own spending by nearly $100 million in the past year, she said.

The company is investing in upgrades at a slower pace, had deferred some expansion projects and its management didn't get raises this year, Barnes said. AmerenUE also reduced its staff with a layoff last fall and continues to not fill some positions as they become vacant.

From the time the rate case is filed in September, the Public Service Commission has 11 months to review AmerenUE's case.

mmiller@semissourian.com

388-3646

Pertinent Address:

45 S. Minnesota, Cape Girardeau

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