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.
