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PSC poised to approve controversial utility rules
By Jeffrey Tomich
ST. LOUIS POST-DISPATCH
02/28/2008
Missouri regulators are poised to approve rules today that would help AmerenUE and other utilities more quickly recoup billions of dollars of environmental costs.
Initially drafted in October, the rules stem from legislation signed by Gov. Matt Blunt in 2005 over the cry of consumer groups, who complained the measure would needlessly increase rates and potentially boost utility profits.
Consumer advocates fear the rules will be overly vague, lack adequate consumer protections and open the door for utilities to raise bills without the close scrutiny of a full rate case, a thorough audit of a utility’s books that looks at all expenses, not just those that are going up.
“Any time you’re allowing utilities to raise rates without a full rate case, you run the risk of the utilities making more than they should and customers paying more than they should,” said Missouri’s Public Counsel Lewis Mills Jr., who represents utility consumers.
St. Louis-based Ameren, which sells electricity to 1.2 million customers in Missouri, said the environmental surcharge wouldn’t generate additional revenue; it would just allow for quicker reimbursement of costs incurred because of government mandates.
Allowing for a faster recovery of costs would help cash flow and reduce borrowing costs, potentially aiding customers over the long term, spokeswoman Susan Gallagher said. The rules also could provide an incentive to quickly retrofit older coal plants with pollution controls, rather than to defer improvements.
Ameren plans to spend as much as $2.12 billion through 2016 to comply with federal environmental regulations aimed at reducing emissions of pollutants such as sulfur dioxide and mercury. Statewide, utilities face more than $4 billion in environmental costs, according to the Missouri Energy Development Association, the lobbying group for the state’s utility industry.
The environmental surcharge would be capped at 2.5 percent of a utility’s gross revenue, according to the 2005 law. AmerenUE’s revenue exceeded $2 billion in 2007.
If approved, the rules wouldn’t have an immediate impact. Utilities would have to individually seek authority from the PSC before they could add a surcharge.
Ameren is expected to do so when it files for an electric rate increase this spring. But it’s not a given that regulators would approve the surcharge. In 2006, the PSC adopted similar rules to let utilities collect fuel expenses through a special surcharge, but the commission declined a request by Ameren to use the surcharge.
The chairman of the PSC, Jeff Davis, said any rules approved would contain ample consumer protections, including a prudence review every 18 months and a full rate case before a surcharge is implemented and another four years after.
“You’re going to have two shots in a four-year period to look at everything,” Davis said. “We’re going to have more access to their books than we’ve ever had before.”
John Coffman, an attorney for the AARP and Consumers Council of Missouri, is skeptical of the surcharge because it removes the incentive for utilities to keep costs down.
“The surcharge is just about boosting revenue and shifting business risk onto consumers,” said Coffman, Missouri’s former public counsel. “It’s potentially the biggest boondoggle we’ve seen of this type.” |
