Fuzzy math, Ameren-style

AmerenUE is telling lawmakers and ratepayers that financing charges for a new nuclear plant would increase electric rates by 10.5 percent. Or maybe 10.8 percent. Certainly no more than 10.99 percent.

State regulators did the math for themselves. The result, based on data provided by the utility: a 23 percent increase over current rates by 2017 -- more than double any figure that AmerenUE is using.

In math class, that would be a problem. But not for Missouri's largest electric company.

"We're saying 1 percent to 3 percent [a year]," AmerenUE spokeswoman Susan Gallagher said. She pointed out that 23 percent divided by eight years is 3 percent, more or less.

But AmerenUE says the plant would take just six years to build. So six is the number on which regulators based their calculations -- from 2012, when the first increase would occur, to 2017, when the plant would be completed. That makes the average annual increase closer to 4 percent.

Back in February, the utility told legislators that financing costs would add 1.8 percent annually for six years to electric rates, a cumulative average of "10.5 percent" (even though 1.8 times six is 10.8).

Confusing? Yes. But things get worse. Even the expert analysts at the Missouri Public Service Commission found AmerenUE's numbers confusing.

Wess Henderson, executive director of the PSC, which regulates utilities, said AmerenUE's figures need explanation "to prevent a less-than-highly sophisticated reader from making the wrong assumptions or reaching the wrong conclusions."

For example, most folks would assume that the 10 percent figure cited by AmerenUE represents the increase over 2009 rates, Mr. Henderson explained. In fact, AmerenUE's assumptions are based on unspecified future rate increases that would nearly double its revenue by 2017. Those assumed revenue increases "appear unreasonably high," Mr. Henderson said.

By assuming higher revenue, Ameren can reduce the percentage of costs attributable to a new nuclear plant. For example, if rates were $2 a month, a $1 finance charge would represent a 50 percent increase. But if you assume future rates have risen to $10 a month, then that same $1 charge becomes a mere 10 percent increase.

By assuming unrealistically higher revenue, AmerenUE makes Senate Bill 228 -- the bill it's pushing in the Legislature -- seem far more benign than it actually is. "They're trying to put the best spin on it," Mr. Henderson said. "They're trying to sell something to the Legislature."

Senate Bill 228 would change state law so that customers could be billed for financing costs while a second nuclear power plant is built in Callaway County. Charging for what's called construction work in progress (CWIP) isn't allowed under a law overwhelmingly passed by voters in 1976.

AmerenUE claims that its calculations -- which it has refused to make public -- show that repealing CWIP would save ratepayers money. Calculations performed by consumer advocates and utility regulators contradict that claim.

Senate Bill 228 could come to a vote early this week. It should be rejected.

AmerenUE has been pulling out all the stops, launching a television advertising campaign that claims opponents are making "misleading" claims.

In one such ad, former newscaster Karen Foss, now an Ameren vice president, sits at what appears to be a kitchen table. "We believe our customers understand and deserve straight talk," Ms. Foss says.

We believe that, too. But neither customers nor legislators are getting it from AmerenUE.