JEFFERSON CITY, Mo. -- Missouri regulators approved Thursday a $400 million settlement with AmerenUE that could eventually save customers of the state's largest electric utility several dollars a month.
The five-member Public Service Commission voted unanimously in favor of the settlement, which provides for both rate reductions and consumer benefits over four years.
Commission staff, the utility and others reached the settlement last week after months of negotiations following a PSC complaint that AmerenUE's rates were unreasonable and should be reduced.
The settlement, which was recommended for approval by PSC staff prior to Thursday's meeting, contains about half of the rate reductions and benefits originally sought by the PSC staff, but more than three times what AmerenUE officials had offered about two months ago.
AmerenUE serves about 1.2 million electric customers in 66 Missouri counties, primarily in the eastern half of the state, although it also has some pockets in western Missouri.
"This represents a win-win situation for all sides," said Kelvin Simmons, chairman of the commission. "Rate reductions, a bill credit, customer assistance programs and commitment regarding infrastructure investment in Missouri make this agreement one that Missouri Public Service Commission believes is in the public interest."
Under the settlement, a typical residential customer using 1,000 kilowatt-hours of electricity would save about $3.80 monthly, compared to current rates, by the time the lower rates are fully phased in. The reductions should appear on bills starting in September or October.
That same customer could have saved $7.71 monthly under the plan originally pushed by PSC staff.
"It gives certainty to rate-payers about what they will be paying," said commission member Steve Gaw.
Under an alternative state regulation plan that expired a year ago, AmerenUE was to share with its customers a portion of its earnings over certain levels. The settlement agreed to Thursday calls for a $40 million credit to AmerenUE electric customers, a result of the expired plan. The typical residential customer, using the 1,000 kilowatt-hour average, would see a credit of $15.40 on their August or September bill.
"Obviously, we are very pleased with the commission's timely review and approval of the settlement agreement," Charles Mueller, chairman and chief executive officer of Ameren Corp., said in a statement. "This settlement will provide significant benefits to our customers and to the state of Missouri, while ensuring the future energy needs of the state."
Under the new regulatory plan, AmerenUE is to provide a $50 million rate reduction retroactive to April 1. Rates are to decline another $30 million on April 1, 2003, and decrease by yet another $30 million on April 1, 2004. After that, rates are to remain unchanged until June 30, 2006, when the agreement ends.
Because the reductions are cumulative, customers will save an estimated $377.5 million over four years, compared to AmerenUE's current rates.
Some customers also would benefit from another $22 million that AmerenUE would contribute to economic development projects, home weatherization programs and bill payment aid to low-income residents.
AmerenUE officials have said the proposed settlement would cut its 2002 earnings by about 22 cents per share. The company said the reduction already had been incorporated into its earnings guidance.
Besides the customer rate reductions, AmerenUE touted provisions in the settlement committing it to between $2.25 billion and $2.75 billion in energy infrastructure improvements over the next four years.
The rate reductions would amount to a roughly 5.4 percent decrease for residential customers and a more than 6 percent drop for small-business consumers.