Missouri regulators consider $200 million AmerenUE rate case

JEFFERSON CITY, Mo. -- Missouri utility regulators on Thursday began considering a request from the state's largest utility to raise electric rates for more than a million customers.

AmerenUE has asked the Public Service Commission to permit the St. Louis-based utility to increase its revenues by more than $200 million from its electricity production. It's the second time in less than two years that the AmerenUE has sought a rate increase.

"We're asking for mainstream treatment," said Thomas Voss, AmerenUE president and chief executive officer. "This case is pretty simple. We asked for what we needed."

Besides a rate increase, the utility also is seeking a fuel adjustment clause that would allow it to raise consumer rates when its costs rise for the fuel it uses to produce electricity.

AmerenUE serves about 1.2 million Missouri electric consumers. It's a subsidiary of Ameren Corp., which has 2.4 million electric and 1 million natural gas customers in Missouri and Illinois.

In April, AmerenUE filed a request with state regulators for a 12.1 percent rate increase generating $251 million annually. The company estimated that a typical residential customer would pay about $9 a month more.

Kevin Thompson, general counsel for the Public Service Commission, said Thursday that the regulatory board's staff recommended a rate increase that would allow AmerenUE to earn an extra $68 million. Staff members also oppose allowing Ameren to have the flexibility to raise electric rates if fuel prices increase.

"You must be all the more careful in not giving this company one penny more than it needs to operate and to earn a fair return on the value of the investment," Thompson said. "Not one penny more."

Ameren attorney Jim Lowery called the $68 million recommendation "ridiculous" and "out of the mainstream." Ameren has argued that labor and material costs have skyrocketed and the national economy has soured, making it more costly to get the credit the utility needs.

The rate increase was opposed by several intervening interest groups, including environmentalists, senior citizen advocates and industrial energy users, who called a bump in electricity costs a potential threat to the state's economy.

State Public Counsel Lewis Mills, who advocates for consumers before the Public Service Commission, urged regulators to err on the side of customers because he said it's a lot easier for companies like Ameren to get energy rates raised than it is for an individual to file a complaint and have rates lowered.

Mills spent much of his time Thursday asking Voss about the utility's nuclear plans, because an estimated $51 million in application costs for a second mid-Missouri reactor are included in the rate case.

Earlier this year, Ameren filed an 8,000-page application with the Nuclear Regulatory Commission to build a second reactor near its existing facility in Fulton. The utility hasn't decided whether it will build the reactor, but one of the deciding factors will be a state law that restricts what costs can be recouped.

That law bars utilities from charging ratepayers for new construction before the facility is online. Voss said Thursday that without repealing that restriction, Ameren will not build a second reactor.

The utility has estimated that the new reactor would cost at least $6 billion, or $9 billion with financing -- roughly the entire value of Ameren Corp.

Voss said applying for a nuclear permit that might never be used is a "prudently incurred cost to keep that option open." He later said "it's kind of like planning ahead."

The Public Service Commission in 2007 granted AmerenUE a $43 million rate increase -- just a fraction of the $361 million the utility requested. Regulators said then that they were sending a message that Ameren needed to improve its reliability and customer service.