Cape residents question Ameren's rate-increase request

Representatives from utility provider Ameren Missouri and the Missouri Public Services Commission hosted a sometimes-tense public hearing Tuesday in Cape Girardeau to discuss the rate hike Ameren is seeking.

The increase request, which Ameren filed in July, would mean more than $206 million for the company in annual revenue and $99 more to the average residential customer’s annual bill.

Tuesday’s public hearing was one of several around the state as part of a review allowing residents to pose questions and voice opinions about the request.

The questioning phase was somewhat tense, as attendees expressed their displeasure with the prospect of having to pay more for service.

Questioners focused on how the closing of the Noranda aluminum smelter plays into the proposed hike. The now-shuttered plant in New Madrid, Missouri, was Ameren’s largest electricity customer. Its closing last year cost Ameren more than $50 million.

Some questioners suggested the rate increases would shift Ameren’s losses from the Noranda closing to ratepayers. But the company’s vice president of external affairs and communications Warren Wood said that’s not an accurate way to cast the rate increase.

Wood said Noranda, being such a large customer, had been a boon the average customer might not have realized.

He said because Ameren didn’t have to build new infrastructure to serve Noranda, and revenue gleaned from the plant covered a portion of the system’s fixed cost of service, regular customers’ rates were lower than they otherwise would have been.

That benefit is going away, and the rates reflect that, he said.

He also said added revenue from the proposed rate hike will go to infrastructure investment and transmission costs.

While the Public Services Commission agrees Ameren should get a rate increase, its assessment of what’s appropriate is about a quarter of what Ameren’s filings seek.

If the increase were to be $52 million, as commission staff suggests, the average residential customer’s bill would increase about 1.8 percent.

One of the case’s most important issues is deciding the rate Ameren’s return on equity. According to documents provided by the commission, its staff recommend setting the return on equity at 8.75 percent — somewhat less than the 9.53 percent rate Ameren has had since the last regulatory rate review.

The difference between the staff-recommended return on equity and capital structure and Ameren’s proposal amounts to $77.8 million.

The commission is expected to make a decision in the case in April. Any rate changes would occur in May.

tgraef@semissourian.com

(573) 388-3627