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Regulators approve $260M rate increase for Ameren

Thursday, December 13, 2012

JEFFERSON CITY, Mo. -- Ameren Missouri electric customers will face a $260 million annual rate increase as a result of a decision Wednesday by utility regulators, though some of that extra money could be returned to them in savings through new energy efficiency incentives.

The rate increase, scheduled to take effect in January, marks the fifth time in six years that rates will have risen for the 1.2 million customers of Missouri's largest utility. Monthly bills will go up by about $10 for an average residential customer using about 1,100 kilowatts of electricity, according to the Missouri Public Service Commission.

Commission members voted 3-1 Wednesday for the rate increase, which amounts to about two-thirds of the $376 million that Ameren originally requested last February. Though a majority of commissioners described it as "reasonable," consumer advocates said the $260 million price hike is too much for residents to bear in the current economy.

"Rates have been going up by leaps and bounds for the last five years," said state Public Counsel Lewis Mills, Missouri's official consumer advocate in utility regulatory cases. "It's going to put a real headlock on a lot of customers."

The rate increase is intended to cover such things as Ameren's fuel costs, infrastructure improvements, vegetation trimming, storm repairs and employee benefits. Additionally, about $89 million of the rate increase would help pay for energy efficiency incentives that ultimately could save money for some residents and businesses. A 2009 law allows utilities to recoup money for efficiency measures, just as they long have done for investments in power plants and other capital expenses.

The result is that all of Ameren's electric customers will shoulder a share of the cost for the utility to provide incentives for some businesses or homeowners to lower their utility bills through more efficient lighting, heating and cooling systems. But all consumers stand to benefit if the energy savings push back the need for Ameren to build costly new power plants, said utility regulators.

"Our hope is that this report and order not only gives customers the chance to save, but it means that Ameren is not going to come in for another rate increase next year or the year after," said PSC Chairman Kevin Gunn. "So we bring some rate stability to the customers."

Warren Wood, Ameren's vice president of legislative and regulatory affairs, said the St. Louis-based utility has not decided whether it will seek another rate increase in the near future, and is still reviewing the commission's 120-page decision.

"There were some aspects of the order that looked like appropriate rate-making policy, and there were other pieces that were a bit below national averages," Wood said.

Utility profit margins are capped by state regulation. Ameren Missouri currently is allowed up to a 10.2 percent return on equity and had sought to increase that to 10.5 percent. Instead, the PSC capped that at 9.8 percent, which it said was a little below the average rate allowed nationally.

Decreasing the amount of money Ameren can earn could make it more difficult for the company to attract investors, Wood said.

But commissioner Robert Kenney, who cast the lone no vote, said the earnings percentage was too high considering Ameren already is able to quickly recover its fuel costs and recoup money spent on repairing storm damage and clearing trees away from power lines.

"The commission has made it easier, faster and less risky for Ameren to collect its money from its customers," Kenney said.

John Coffman, an attorney for the Consumers Council of Missouri and AARP Missouri, said his clients advocated for an 8 percent return on equity for Ameren.

The amount approved by regulators is "out of sync with the very, very low interest rates and economic conditions that we're currently experiencing," Coffman said.

But Coffman was complimentary of at least one portion of Wednesday's decision. He praised regulators for rejecting Ameren's request to increase the fixed cost on residents' monthly bills to $12 from the current $8.

Combining Wednesday's rate increase with others from the past six years, utility regulators now have allowed Ameren to increase its revenue by nearly $1 billion, said Chris Roepe, executive director of the Fair Energy Rate Action Fund, which represents consumers and industrial energy users.

"These actions absolutely undermine what was not too long ago a strength in Missouri -- low energy costs," Roepe said.

Wood said Ameren's rates will remain below national and regional averages, even with the latest increase.

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Five rate increases in six years! Doesn't seem exactly fair. When is the utility commission going to receive their 'commission'?

-- Posted by 12String on Wed, Dec 12, 2012, at 1:29 PM

For those who have a pressing desire to read the 120-page Report and Order - https://www.efis.psc.mo.gov/mpsc/commonc...

It seems Ameren has until 18 December to provide a revised tariff sheet for approval, in which the specific charges beyond the flat rate customer meter fee identified in the article will be identified.

-- Posted by fxpwt on Wed, Dec 12, 2012, at 5:29 PM

wonder if the commission has to pay their own electric bills like the rest of us..

-- Posted by bagman75 on Wed, Dec 12, 2012, at 6:00 PM

Hope Mr. Wood sleeps well at night knowing their is elderly people freezing in their homes. Some of them already have to decide which to pay, their electric or get their heart medicine. Some of them sit in their homes with coats on already. Sleep tight there.... hope its true what comes around goes around.

This forgets to mention that yes their rates have not increased compared to other areas.....but wages in this area have been the same for well over 10 yrs. With everything increasing and people making the same money, its getting extremely tough to just supply the basics.

-- Posted by blueeyeleo on Wed, Dec 12, 2012, at 6:10 PM

The public service commission should rename it's self the ameren u.e. commission.

-- Posted by 314djhh on Wed, Dec 12, 2012, at 7:03 PM

This exactly what Dear Leader Obama hopes for... ...higher and higher energy prices to force the American people to purchase their energy from his well-connected friends in the battery industry:


-- Posted by bbollmann on Thu, Dec 13, 2012, at 5:26 AM

You think?

-- Posted by scared of the future on Thu, Dec 13, 2012, at 10:21 AM

Perhaps Ameren will be kind enough to put the increase into a fund (instead of pockets) towards helping homeowners purchase generators for when the power goes out?

-- Posted by dmt49 on Thu, Dec 13, 2012, at 11:01 AM

They always say that the citizens would not have to pay for the mistakes at taum Sauk but they have consistently raised rates since. They will say that they are losing money (will not say because of taum Sauk but that is the truth) and that they need to raise rates for other "improvements" but if they were not paying for the fiasco at Taum Sauk then they would have more money to pay for improvements. Look at the PROFITS that they have had over the years. I guess the PCS didn't feel that the PROFITS were enough.

-- Posted by cartman89 on Thu, Dec 13, 2012, at 3:06 PM

Ameren has submitted their revised tariff sheet for approval, to reflect the final PSC Order pertaining to the rate case - https://www.efis.psc.mo.gov/mpsc/commonc...

Given the generally-cited average monthly residential usage rate of 1100 kilowatt-hours - here's what I came up with - past, present, and coming soon, if approved as submitted. The totals include the current local 8.25% sales/usage tax, but do not include any Fuel Adjustment Clause (FAC) values, as these are determined on-the-fly.


2007 rate schedule____$101.21*______$67.17*

Current rate schedule_$135.63_______$89.32

Proposed schedule_____$149.32_______$99.44

* - 2007 sales tax rate was 7.25%.

** - Summer rate schedule is defined as the June through September billing periods (4). Winter rate schedule is defined as the October through May billing periods (8).

Looks like additional electronic comments were sent into the PSC after their decision last week. https://www.efis.psc.mo.gov/mpsc/resourc... Had to chuckle at comment #1937 - "Consumer opposing rate increase. Abusive on the call."

Hmmm, back in 2007, began a household energy efficiency quest based partially on a forecast that electricity rates would increase 50% over the next five years. (But, mostly because I'm just Tweety-bird cheap, cheap, cheap). Seems the predictor was pretty much spot-on...

-- Posted by fxpwt on Tue, Dec 18, 2012, at 6:52 PM

Appears the PSC staff has rendered their stamp of approval towards the revised tariff sheets submitted by Ameren - "Attached hereto as Exhibit A is Staff's Recommendation and Memorandum wherein Staff states that it has examined Ameren Missouri's compliance tariffs and determined that the same are indeed compliant with the Commission's Report & Order referred to in Paragraph 2, above, and should therefore be APPROVED for service rendered on and after January 2, 2013. from https://www.efis.psc.mo.gov/mpsc/commonc...

-- Posted by fxpwt on Tue, Dec 25, 2012, at 12:53 PM

It's official, and effective 02 Jan 2013 (that's next Wednesday, folks) - "ORDER APPROVING COMPLIANCE TARIFF SHEETS" https://www.efis.psc.mo.gov/mpsc/commonc...

-- Posted by fxpwt on Thu, Dec 27, 2012, at 5:57 PM

Further consuming additional bandwidth on a way-dead topic -

Gots to looking a little deeper at the new rates just going into effect on 02 Jan 2013 (Revision 40) as compared to the old rates (Revision 39).

FWIW - the increase in the per-KWH energy-only rate came out to about 7.3% - specifically, 7.27% on all summer rate period consumption (from 10.59 to 11.36 cents per KWH, an increase of 0.77 cents per KWH), 7.30% on winter rate consumption less than 750KWH (from 7.53 to 8.08 cents per KWH, an increase of 0.55 cents per KWH), and 7.17% on winter rate consumption over 750KWH (from 5.02 to 5.38 cents per KWH, an increase of 0.36 cents per KWH).

The apparent sneaky-snake in the mix was the drastic change in the energy efficiency program charges - going from 0.07 cents per summer KWH, and 0.04 cents per winter KWH under the former rate schedule - to a summed fee consisting of an investment charge and a program charge equalling 0.33 + 0.12 = 0.45 cents per summer KWH, and 0.33 + 0.07 = 0.40 cents per winter KWH. This comes out to increases of 0.38 cents per summer KWH (543%!) and 0.36 cents per KWH per winter KWH (900%!!).

With these energy-efficiency charge changes added in, the effective per-KWH rates went from 10.66 to 11.81 cents per KWH in the summer, for an increase of 10.79%, and from 7.57/5.06 (usage < 750KWH / usage > 750KWH) to 8.48/5.78 cents per KWH in the winter, for true increases of 12.02% and 14.23%, respectively. Keep in mind that the winter rate schedule runs for 8 months of the year...

In essence, it appears that the energy efficiency thing ranges from about 1/3 to 1/2 of the total rate increase, depending on which rate schedule (summer / winter < 750KWH / winter > 750KWH) one currently falls under.

The flat-rate meter fee, or customer charge, remained at $8.03 per month (whew, thank you, PSC!). For the generally-cited 'typical' 1100 KWH per month usage, this amounts to 0.73 cents per KWH. Had it gone to $12.00 per month as Ameren had initially requested, this would have amounted to 1.09 cents per KWH.

Sales / usage tax also remains at 8.25%, amounting to 0.97 cents per summer KWH, and 0.70 / 0.44 cents per winter KWH. Perhaps more of interest is the incremental piggy-back increase in tax revenues amounting to an additional 0.09 cents per summer KWH, and 0.08 / 0.06 cents per winter KWH. Again, for the 'typical' 1100KWH monthly usage, one will be paying about $0.99 more per month in sales taxes during the summer, and $0.81 more per month during the winter.

-- Posted by fxpwt on Sun, Jan 13, 2013, at 10:16 AM

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