Utility customers grill Ameren representatives, state regulators at rate increase hearing

DEXTER, Mo. -- About 60 people attended a public meeting held by the Missouri Public Service Commission to voice their concerns about Ameren Missouri's proposed 11 percent electricity rate increase.

The meeting took place Tuesday at the National Guard Armory in Dexter.

Ameren Missouri filed a rate increase request with the PSC on Sept. 3, which would generate about $263 million in revenue for the company. In its filing, Ameren said $200 million, or 75 percent, of the increase was needed to recoup energy infrastructure investments, environmental controls and other improvements to provide more reliable and greener energy. The other 25 percent would go to pay higher fuel costs for power plants.

Last May state regulators approved a $226 million rate increase for Ameren.

Kevin Kelly, public information and education officer with the PSC, said the Dexter meeting was the first of 14 meetings to be held around the state.

Dave Wakeman, a vice president with Ameren Missouri, said the utility company spent nearly $600 million to replace scrubbers at the Sioux Power Plant to comply with federal clean air laws. He said the scrubbers would eliminate nearly 100 percent of the sulfur dioxide emissions at the plant. He said $110 million of the rate increase relates to the Sioux scrubber project.

Lewis Mills, a consumer advocate with the Office of Public Counsel, was also on hand to answer questions, as was John Cassady, a PSC staff member.

Wakeman pointed to Ameren's good reliability ratings and said the company wants to continue to offer clean, reliable energy, and that comes at a cost. He said the company by law cannot pass on the cost of reinvestment in equipment until the investments have been made and the equipment is functional. He also said fuel costs to operate the generating plants are increasing.

The PSC staff recommendation is for an increase of $72 million, or around a 3.93 percent increase instead of the 11 percent requested. The increase would amount to around $3.47 on the average monthly Ameren residential bill. The 11 percent increase requested by Ameren would amount to around $9.30 per month, based on 1,100 kilowatt hours.

Mills, whose office acts a voice for consumers, said his agency is concerned about requested rates to pay for rebuilding Taum Sauk power plant and passing on the cost associated with the rate increase process to the consumers.

"You are being asked to pay for their rate increase, and that's not right," Mills stated. He also said his agency questions the amount of increase being requested by Ameren for fuel costs recovery.

The PSC distributed information that outlined major issues which included:

* Ameren's case reflects a 10.90 percent return on equity while the PSC recommends an 8.25 o 9.25 percent return.

* The PSC staff recommends approximately $21 million less in net base fuel cost than requested by Ameren.

* A $10 million decrease in funds for employee pay and benefits due to deductions in the Ameren work force.

* Reductions in the amount requested for amortization expenses and for the cost of the Sioux scrubbers.

When the floor was opened for questions, one woman questioned information that was distributed that showed that rates decreased at one point in time.

"I don't remember rates going down," she stated.

Cassady said there was an instance of that happening in 2001.

Another person asked, "When was the last time a rate increase was not accepted?"

Cassady again said the PSC had rejected a rate increase request a few years ago.

Another person asked, "What were Ameren profits in 2010?"

Wakeman said that was difficult to determine. He said that Ameren had reinvested millions into providing cleaner, more efficient energy and that stockholders were entitled to a return on their investment. No actual figures were provided.

Another person asked if a "100 percent audit" was done on the company. Cassady responded that a "thorough" audit was done by the PSC staff.

"How long does the 11 percent increase last?" asked one man.

Mills said that any increase that was granted would last until the next time a rate increase was requested. He noted that Ameren was granted a rate increase just last year. He said it could be a year or perhaps two or three years before another increase was requested.

A man stated that he lived in a small house and that his bill last month was $260. He said his grandparents had a utility bill of $300, and they were on a fixed income. He said people can't afford the utility rates at present and sure couldn't afford an increase.

"Where does it stop?" he asked.

Wakeman said Ameren Missouri had the lowest rates of any investor owned utility company in the state.

He noted that Ameren has several programs to help consumers who are on fixed incomes or needed help with their utility bills. He said there are both residential and business programs that can either help pay utility bills or can help the consumer make his home or business more energy efficient.

The man countered that energy efficiency only goes so far, and that he had reduced the temperature of his home.

Another woman echoed that sentiment and said it was getting to be impossible for people on a fixed income to make ends meet. She noted layoffs at Faurecia and other economic downturns that were making it hard on people. She listed all of her monthly expenses and asked Wakeman how a person drawing $600 a month could afford to pay those bills.

Kelly intervened and said she should make these statements to the judge during the official recorded portion of the hearing. He said the hearing was an opportunity to voice these concerns to the PSC.

A man questioned expenses surrounding the Taum Sauk plant. He pointed out that negligence and poor engineering caused the problem and rate payers shouldn't be expected to pay for the company's negligence.

Wakeman said Ameren was not passing on any of the costs due to the plant failure. He said the only costs being passed on were for rebuilding, which improved facilities. He noted that it amounted to only $15 million of the $263 million requested.

Mills stated that his office opposed any rate increase due to the Taum Sauk situation. He said the plant would still be in operation if not for the problems, and that any improvements that were made were due to new designs and requirements for power plants. He said it was not the consumer's fault that a new plant had to be constructed.

Several people expressed their unhappiness with another electricity rate increase in the face of a struggling economy.

Pertinent address:

Dexter, MO