AmerenUE rate increase is not needed

June 8th, 2010

Common sense tells us Ameren rate increase is not needed

By Judi Roman
06/08/2010

Two items in the Post-Dispatch recently present a fascinating dichotomy. First, Local 1 of the International Brotherhood of Electrical Workers agreed to reduce pay and benefits by 8.23 percent now and 8.73 percent in January for a three-year period. Second, AmerenUE received a $226 million rate increase, resulting in an 11.76 percent increase in residential electric bills.

Which action do you believe best reflects the public interest?

This year’s rate increase follows one in 2009 that totaled $162 million and already increased the average customer’s monthly bill by 8 percent. And another whopper is expected within the next year.My common-sense observations tell me that AmerenUE has little incentive to manage its business more efficiently rather than extract its 10.1 percent Public Service Commission-approved profit margin through rate increases.

Consider:

— Reflecting its monopolistic culture, AmerenUE asks for surcharges, for example, for the costs associated with complying with environmental regulations or for increased fuel costs. These surcharges amount to automatic rate increases granted without thorough review. Other companies that are not monopolies also have to comply with environmental regulations and other cost increases.

These non-monopolies don’t get an automatic pass on increased costs. They figure out new ways of operating and/or managing to absorb increased costs without simply passing them along. Consumers also do this. When the rent goes up and our budget won’t stretch any further, we cut out some other expenses. Or we move.

Why doesn’t AmerenUE do the same? It employs thousands of management people. Surely those managers are as competent and creative as managers in the non-monopoly companies that do not pass along all their increased costs.

I’m confident that AmerenUE will answer that it does operate efficiently. Indeed, it may say that, in response to the economic downturn, it eliminated some 300 positions and froze management salaries in 2009. Welcome to the real world. Keep it up. It makes me think of the grocery ads. Supermarkets pat themselves on the back for cutting the price of orange juice by a small percent, and I wonder why they have been charging me extra for so long.

— Most U.S. corporations would love to have a virtually guaranteed double-digit profit margin. But that’s not good enough for AmerenUE. No, to protect itself from inflation that it forecasts, AmerenUE asked to increase its approved profit margin to 11.5 percent. The PSC ultimately granted it 10.1 percent. What inflation? Look at interest rates. Look at anything. Where’s the inflation? Nowhere.

— Economic conditions remain tough — for almost everyone but AmerenUE. One in 10 Americans cannot find a job. The percentage among minorities is far higher. Still, AmerenUE seeks back-to-back rate increases. Bad PR? Undoubtedly. But when you’re a monopoly, what choice do customers have? Almost none, unless you have the capital to escape the grid.

— Utility consumers don’t receive as much help as we used to from Missouri’s official consumer advocate. Staffers at the Office of the Public Counsel are extremely hard working and able, and they do a lot with the lean resources that they are given. Still, compared to the scores of lawyers, financial and PR specialists AmerenUE employs for its rate cases, the Office of Public Counsel always has been understaffed. Not to mention the legions of lobbyists that prevented this advocacy office from receiving stable funding during this year’s legislative session. In 2005, it had 15 staff people. Today it has only seven. Folks, this is not a level playing field.

So, what can we do?If you agree with me, I invite you to join the Consumers Council of Missouri (www.moconsumers.org) and let your voice be heard. Together, we can make a difference.

Judi Roman is executive director of the Consumers Council of Missouri.

AmerenUE Gets 10-percent rate hike

June 1st, 2010

PSC grants AmerenUE 10-percent electricity rate hike

Source:

ST. LOUIS POST-DISPATCH

By Jeffrey Tomich
05/29/2010

AmerenUE on Friday got approval from Missouri regulators to raise electric rates by 10 percent, or $226.3 million a year.

The new rates are expected to take effect in late June. When they do, a typical residential customer who uses 1,100 kilowatt-hours a month will pay about $108 more a year, according an analysis by the Public Service Commission staff.

The increase is the third in three years for St. Louis-based AmerenUE, the state’s largest electric utility with 1.2 million customers.

The PSC voted 4-1 to grant AmerenUE more than half of the $402 million increase initially sought in July. At the time, the utility said it needed to boost revenue to compensate for rising fuel prices, higher financing costs and investments made to improve reliability.

AmerenUE had no immediate comment. The utility was still reviewing the 102-page order on Friday afternoon, spokesman Michael West said.

PSC Chairman Robert Clayton cast the lone dissenting vote.

“The increase was more than I thought the evidence allowed for,” Clayton said in an interview.

AmerenUE’s rate proposal met with a backlash from customers. Hundreds of people attended a series of public hearings across the utility’s service area last winter and wrote letters and e-mails to the PSC.

The response was at least partly the product of a public relations campaign funded and organized by the Fair Electricity Rate Action Fund, an ad hoc group organized and funded by some of Ameren’s largest customers. The group includes its largest customer, Noranda Aluminum Inc., which operates a smelter in the Missouri bootheel.

Clayton said the commission was mindful of hardships faced by customers as the economy crawls out of a deep recession.

Friday’s order included a $1 million pilot program to help low-income customers and reduced AmerenUE’s allowed return on equity, or profit, to 10.1 percent from a previous rate of 10.76 percent to reflect changes in capital markets.

“The (customers’) concerns raised were understood,” he said. “There’s no question that these are challenging economic times.”

More than half of the increase sought by AmerenUE was to cover higher fuel costs, including the cost of coal shipped from Wyoming. The rest was to cover higher financing costs and to fund reliability projects at power plants and its 25,000-square-mile network of poles and wires.

Prices for most types of energy have declined because of the recession. But AmerenUE buys coal under contracts that have terms of three to five years, so energy price increases from previous years haven’t been fully reflected in rates.

The commission approved $58 million for tree-trimming expenses and infrastructure inspection to help comply with new rules put in place after a series of widespread power outages in 2006 and 2007.

AmerenUE will also be allowed to continue to add a fuel surcharge to bills to help it more quickly recoup fuel expenses.

The PSC’s order comes a month after the Illinois Commerce Commission approved a $5 million electric and natural gas rate increase, slashing Ameren’s $130 million request by more than 95 percent.

The ICC granted Ameren’s Illinois utilities an additional $10 million earlier this month to correct errors in its original order.

On Friday, Ameren sought a rehearing in the Illinois case, noting that the approved rate increase is less than $16 million in pension and benefits expenses that were incurred and booked for 2009.

Post Dispatch Says NO to AmerenUE Proposals

May 8th, 2010

To utilities, “increased efficiency” means getting your money even faster.

Source:

ST. LOUIS POST-DISPATCH

By Editorial Board
05/04/2010

Suppose you wanted more frequent pay raises at your job — not just once a year, but every six months. Fat chance, right?

Suppose you wanted less scrutiny from the boss when it came time to figure your raise. That way, the boss would have less opportunity to spot your errors or bring in experts to examine the quality of your work. What are the odds that you’d get it?

Now let’s suppose that you’re one of Missouri’s big utility companies. Instead of pay raises, you’re worried about rate hikes. Right now, your odds of getting twice-a-year raises look a lot better.

All you’ve got to do is persuade the Missouri Legislature to pass an anti-consumer bill within the next two weeks. There are four bills from which to choose, each containing twice-a-year rate hike provisions.

The Legislature adjourns May 14. Traditionally, in the frantic final weeks of the session, lawmakers have less time to consider what is in the bills on which they’re voting and less time to hear from angry constituents. This is the time of year that many bad ideas are transformed into law.

Utilities say the changes would “increase government efficiency.” If one passes, look for utilities to develop a more efficient way of reaching into your pocket — as if they needed the extra St. Louis went up 8.1 percent in January 2009. Just seven months later, AmerenUE was back before state regulators asking for 18 percent more, or $402 million. That request is pending, but AmerenUE has indicated that it soon will ask for more.

Under current law, the Public Service Commission must settle rate hike cases within 11 months. That means utilities generally are limited to one request each year.

Under the proposed new law, rate hike cases could last no more than six months, meaning utilities could file two requests each year.

That’s not just two rate hike cases for each electric company, including AmerenUE. It also means extra rate cases for water companies, including Missouri American Water, which is seeking a 21 percent rate hike, and for gas companies, including Laclede Gas, which has a $52.6 million rate hike request before utility regulators.None of the four proposed bills would allow additional staff for the PSC, which analyzes and rules on these incredibly complex cases. No more staff is allowed for the Public Counsel’s Office, which represents consumers in utility rate cases. In 2005, that office had 16 staff members working on utility rate cases. Today, it has eight to handle what potentially could be twice as many cases.

More cases and less time to finish them means less scrutiny. The extra time means millions of dollars in potential revenue for utility companies — and in payments from customers.

Consider that 18 percent rate hike request from AmerenUE that is pending. PSC staffers who analyzed the details claim that it is 40 percent too high. The PSC staff says $161 million of the $402 million extra revenue AmerenUE is seeking is for expenses that shouldn’t be figured into rates paid by residential and business customers.

Lawmakers who vote to increase the number of rate hike cases filed by utilities will have to answer to angry voters in November. For their sake, and the sake of overtaxed consumers, they should not approve these changes.

Legislative Update on Missouri’s Payday Lending Crisis

April 13th, 2010

The Consumers Council of Missouri (CCM) will present a Legislative Update on Sunday, April 18 from 4 to 6 p.m. at The Heights, 8001 Dale Avenue in Richmond Heights.

Representative Mary Still (D-25) will speak on Missouri’s payday lending crisis. Rep. Still is the sponsor of House Bill 2116, legislation which would reform the payday lending industry by reducing the outrageous triple-digit interest rates that are currently allowed in hope of bringing Missouri into the mainstream. In additions, Senator Joan Bray (D-24) and John Coffman, CCM’s General Counsel, will provide an update on utility issues.

“Our organization is the only statewide advocacy group for consumers,” said President Joan Suarez, “and we speak for the common interest of all Missourians. Presenting these legislative updates is one of the ways we keep consumers informed about what is happening in Jefferson City that will affect their families.”

This event is free and open to the public. For more information, contact Judi Roman at 314-647-9232.

Join Us for A Legislative Update

April 8th, 2010

April 18th – 4 to 6 pm

Richmond Heights Community Center

8001 Dale Ave.

Learn about what’s happening in Jefferson City that will affect Missouri Consumers.  Senator Joan Bray and John Coffman (and others) will give us an update and answer your questions. Stay informed – see you there.

CCM on Twitter, Facebook

April 6th, 2010

If you’re looking for an easy way to stay on top of consumer information in Missouri, look no further than your favorite social mediums!  CCM is now on Twitter and Facebook, and there are three easy ways for you to get the information you need, depending on the kind of interaction you would like to have with CCM.

  • Follow the Twitter Account
Follow us (Our username is @moconsumers.) to get up-to-the-minute information about consumer information as we–and others–post it.

You’ll simply receive notifications about new posts and any important developments with CCM.

By becoming a fan of CCM you’ll not only receive notifications about new posts, you’ll also be able to ask us questions and give us feedback on the discussion boards about various consumer-related issues.

Fed Approves New Gift Card Rules

March 29th, 2010

Last Tuesday, March 23rd the Federal Reserve gave final approval to the gift card provisions in the Credit Card Accountability Responsibility and Disclosure Act of 2009.  While these rules don’t eliminate the fees many consumers face for not spending funds quickly enough, they do protect consumers from some unexpected costs and further specify that the conditions and terms of the gift card must be clearly stated.Dormancy, inactivity and service fees on gift cards are now prohibited unless:

  1. The consumer hasn’t used the gift card for at least one year;
  2. No more than one of these types of fees is charged each month; and
  3. The consumer is given proper and clear information about the fees

In addition, the expiration dates for the gift card funds must be at least five years after the issue date or five years after funds were last loaded onto the card.These provisions do not go into effect until August 22nd.  Missouri currently has no laws pertaining to gift cards or certificates.In addition, the St. Louis Post-Dispatch published an article about these new regulations on Sunday, March 28, that you may be interested in reading.

Rate Hikes

March 29th, 2010

Information about several rate hikes was in the Missouri news this past week.

  • A $0.34 hike for Laclede Gas Customers was approved by the Public Service Commission, to take effect beginning March 31.  This brings the total monthly charge for customers to $1.34.  This charge will appear on customers’ bills as the infrastructure system replacement surcharge. (ISRS)  For more information about what the surcharge covers you can visit this St. Louis Post-Dispatch article.
  • Missouri American Water Company has put a request forward in front of the Missouri Public Service Commission to raise their rates by 21 percent.  Missouri-American serves about 370,000 customers in St. Louis County.  This proposed rate increase, to upgrade the company’s infrastructure, would increase the average customer’s bill by $5.40 per month, or $16.20 every quarter.  For more information about this proposal you can visit this St. Louis Post-Dispatch article. (Note: this article was also featured in the previous post.)
  • Empire District Electric Company is proposing a rate increase of almost 20 percent per 1000 kilowatt-hours for its customers.  A public hearing was held on the evening of Monday, March 22nd, at which many individuals aired their concerns on how this increase would impact them.  Empire services the Joplin area, and this proposed increase would go towards funding the “largest expansion program in the company’s 100-year history,” according to this article about the proposal in the Joplin Globe.

21 pct. rate hike for tap water is sought

March 24th, 2010

Source:

ST. LOUIS POST-DISPATCH

By Tim O’Neil
03/24/2010

The water company that serves much of suburban St. Louis is seeking a third rate increase since 2007, a request that would boost bills an additional 21 percent, roughly doubling the cost of tap water over four years.

It also wants to create a break for some lower-income customers.

Missouri-American Water Co.’s request is before the Missouri Public Service Commission. Before 2007, the last time Missouri-American won an increase was in 2000.

A 21 percent would boost the average residential customer’s bill by about $5.40 per month, or $16.20 every three months, the company says. Customers in some areas are billed by month, others by quarter. The current average monthly bill is about $30.

A spokeswoman for Missouri-American called the proposal necessary to continue upgrading an aging system and ensure a supply of clean water. A veteran consumers advocate calls it “one of the most dramatic utility rate increase requests we’ve seen.”

Missouri-American serves about 370,000 customers in St. Louis County, south-central St. Charles County and the Incline Village area in Warren County. It is owned by American Water Works Co. of Voorhees, N.J.

The Public Service Commission will hold three public hearings in the area beginning March 31. Evidentiary hearings are to take place in May at its office in the old Governor Hotel in downtown Jefferson City. The commission has until September to act.

Ann Dettmer, spokeswoman for Missouri-American, said the company has spent $177.5 million since 2007 improving and replacing water mains, pumps and equipment at its four water plants. The company maintains more than 4,650 miles of line in the metro area.

“We have to upgrade aging infrastructure,” Dettmer said. “We perform a vital service, and we have an obligation to make sure that our system delivers safe, reliable water.”

But John Coffman, general counsel for the Consumers Council of Missouri, said, “This seems like an awfully large rate increase for a case that doesn’t involve a new water plant or well. It’s the largest request by a water company that I can remember.”

For about 15 years, Coffman worked in the Missouri Office of Public Counsel, which represents the public before the Public Service Commission. He headed the office for four years until 2005, when he was fired by the administration of former Gov. Matt Blunt.

The Consumers Council of Missouri was co-founded in 2006 by Alberta Slavin, longtime consumer advocate and former chairwoman of the Public Service Commission. She died in 2008.

Christina Baker, senior counsel for the Office of Public Counsel, said the office promises to examine Missouri-American’s request carefully. “It seems like every major utility has requested a rate increase and customers are just more and more overwhelmed,” she said.

Also pending are requests by AmerenUE for an 18 percent boost and 6.9 percent more for Laclede Gas Co.

Dettmer, the Missouri-American spokeswoman, said the company seeks permission to reduce the “fixed fee” part of water bills for customers who qualify for utility-assistance programs. That fee now is $12.31 every three months but would drop to $10.96 each quarter if the discount is approved.

Missouri-American’s rate hike proposal is uniform for customers in St. Louis County and St. Charles County, although they have paid different increases in the past. St. Louis County customers had a 6.5 percent boost in 2007 and 20 percent in 2008. In St. Charles County, those increases were 8.7 percent and 27 percent.

Article on the AmerenUE $320 million rate case

March 23rd, 2010

On Tuesday, March 16, the Southeast Missourian published an article written by Chris Blank of the Associated Press which gave a good overview of the current AmerenUE rate case in Missouri.

Due to AP policy we cannot reprint the article on this site.