Pact would exempt low-income from Ameren increase

Low-income and low-usage customers would benefit most from an agreement filed by Consumers Council of Missouri and other groups in the Ameren Missouri rate case.

The settlement also would lower the electric rate for Noranda Aluminum in New Madrid, Missouri, in a way that protects other ratepayers.

If approved by the Public Service Commission, the agreement would, for the first time, exempt qualifying low-income residents from the Missouri Energy Efficiency Investment Act surcharge, saving each about $7 a month.

The agreement also would freeze residential customers' monthly charge at $8, protecting low-usage consumers. Any increase in household electric rates would be applied to usage charges, rewarding consumers who conserve more than the average.

"Some of these reforms to help low-income and low-usage consumers will be welcome relief to customers who have suffered relentless rate hikes in recent years," said Joan Bray, executive director of the Consumers Council of Missouri. "We believe this agreement is the best possible outcome for consumers in this rate case. We are hopeful the Public Service Commission will approve it."

In addition, the agreement includes potential economic development rate assistance for distressed communities in the Ameren service area. Communities in some rural counties as well as parts of north St. Louis County, such as Ferguson, would qualify.

The agreement also would maintain Noranda Aluminum, Ameren Missouri's largest consumer, as a retail customer. Keeping Noranda on the system lowers rates for all other customers. A proposal Ameren Missouri filed earlier in the case suggested making Noranda a wholesale customer. That action would have been illegal and would have raised rates dramatically for residential and small-business customers.

Ameren has raised rates in Missouri by 43 percent over the last eight years. Those rate increases have increased Noranda's electric bill the most. The company, which employs 900 at its smelter in New Madrid, pays Ameren more than $160 million a year for the plant's electricity.

"Ameren's thirst for higher electric rates is harming everyone, from its smallest residential customer to its largest," Bray said. "Granting Noranda a lower rate in a way that protects other consumers right now and for years to come is essential.

"If Noranda were to go out of business or off Ameren's retail system, all other consumers would pay dearly," she said. "To protect all customers, the commission should approve this agreement."

Consumer groups also are asking the commission to take action in the rate case to adjust a lopsided ratemaking process that has resulted in Ameren Missouri earning more than the level of profit allowed by the commission.

Public records turned over by Ameren Missouri show the company earned millions of dollars above the commission's authorized rate of return for almost every quarter from October 2012 to October 2014.

"Ameren's overearnings cost consumers millions of dollars a year," Bray said. "This Ameren rate case is the time for the PSC to send a strong message in favor of customers by putting an end to this costly behavior from the state's largest monopoly."

In the past eight years, Ameren Missouri has increased rates 43 percent, or $860 million, and collected $657 million more in surcharges.

The company is asking for a 10 percent increase, or $264 million. In addition to Consumers Council of Missouri, the groups signing the agreement include the Office of Public Counsel, Missouri Retailers Association and Missouri Industrial Energy Consumers.