PSC twice denies AmerenUE

By Jeffrey Tomich

ST. LOUIS POST-DISPATCH

01/14/2010

Missouri regulators denied AmerenUE twice on Wednesday, including a proposal for a 1.7 percent interim electric rate increase that would have been part of an 18 percent hike requested by the utility.

The Public Service Commission also rejected what was viewed as an effort by AmerenUE to muzzle a public relations blitz organized by a consumer group that opposes the proposed 18 percent rate hike.

AmerenUE, the state’s largest electric utility, last month asked the PSC to clarify rules prohibiting parties in rate cases from trying to sway the commission or its staff outside of the formal hearing process.

The utility pointed to a campaign by a group calling itself the Fair Electric Rate Action Fund but denies it was trying to silence critics. The utility insists it just wanted a clearer idea of what communication was allowed leading up to and during a rate case.

“Suppressing free speech was never an objective of this request,” AmerenUE spokesman Tim Fox said in an e-mailed statement.

The group, FERAF, characterized Ameren’s request as an attempt to institute a gag order.

“We’ve said all along that our goal is to educate Missourians about this 18 percent rate increase,” FERAF spokesman Gregg Keller said. “We’re pleased that today’s ruling is going to allow us to continue.”

FERAF’s members are Noranda, the Missouri Retailers Association, AARP, the Missouri Association for Social Welfare and the Consumer Council of Missouri, Keller said. He wouldn’t disclose how much the group has spent fighting Ameren’s rate proposal.

The group organized last year to challenge plans to repeal a state law that prohibits utilities from charging customers for power plants while they’re under construction. Ameren, which wanted the law undone so it could build a second nuclear plant, unsuccessfully sued FERAF to force the group to pull television ads.

The group re-emerged last month, using radio ads, phone calls and social media sites such as Twitter and Facebook to mount a campaign against higher rates.

FERAF’s campaign caught the attention of the PSC not just because of questions raised by Ameren.

Commissioner Kevin Gunn was among those who received an automated phone call from the group, as did an administrative assistant for Commissioner Jeff Davis.

Keller said the calls to commission members and staff were mistakes and the group makes efforts to avoid communication with PSC members.

The commission voted 3-2 to deny the temporary $37 million, or 1.7 percent, increase.

“Granting a rate increase without benefit of a full audit on questions of disputed facts sends the wrong message,” PSC Chairman Robert Clayton III said in a statement.

AmerenUE filed a request in July to raise rates by $402 million a year, or 18 percent.

As part of that request, the utility sought approval of an interim rate increase to help recover costs of certain investments while the larger rate request was being decided.

Rate cases typically take 11 months to be decided, and Ameren argued that immediate rate relief was warranted to help offset the gap between its actual costs and historical costs on which rates are set. This so-called regulatory lag has been a frequent complaint by Ameren executives.

Interim increases aren’t unprecedented. But they typically have been approved in instances where utilities face financial distress.

Fox, the AmerenUE spokesman, said the utility is disappointed by the decision after presenting “sound justification” for the temporary increase.

A decision on AmerenUE’s full rate proposal is expected by early summer.

St. Louis attorney Robert Kenney named by Nixon to PSC

By Tony Messenger

St. Louis Post-Dispatch

• JEFFERSON CITY — Robert Kenney didn’t last long in the attorney general’s office.

The St. Louis attorney who had been named earlier this year as chief of staff by Attorney General Chris Koster will be leaving that office to take a position on the powerful Public Service Commission just in time to hear a rate hike case brought by Ameren UE.

Gov. Jay Nixon appointed Kenney to the position today. He will need to be confirmed by the Senate to continue in the position past the legislative session that begins in January.

“Robert Kenney earned his credentials in the courtroom in protecting Missouri consumers as an important part of my consumer protection division and the No Call team,” Gov. Nixon said. “As the Public Service Commission works to ensure a reliable energy supply at the lowest possible cost to consumers, Commissioner Kenney’s experience will be a valuable asset for this agency.”

Kenney also worked in the AG’s office under Nixon. Before going to work for Koster, he was a partner in the St. Louis firm Polsinelli Shughart PC.

Kenney, a Democrat, will replace Connie Murray on the PSC. Nixon had previously appointed another former employee, Joe Bindbeutel, to the PSC, but he was never confirmed by the Senate and his appointment was withdrawn. Bindbeutel has been in the news lately for his role in withholding a report about high bacteria levels in the Lake of the Ozarks.

A Missouri Senate committee is to vote this afternoon on a revised — but still deeply flawed — utility bill that was written to benefit the state’s largest electric company.

AmerenUE has applied for a federal permit to build a new nuclear reactor in Callaway County. Whether you think that’s a good idea or not — whether you support nuclear power or oppose it — SB 228 is a bad bill, and not just for AmerenUE customers. are some of the whys:  Please click here to read the full text of The St. Louis Post-Dispatch editorial.

CWIP is among a host of consumer rip-off schemes currently pending in the Missouri Legislature. 

written by John Coffman

General Counsel, Consumers Council of

Energy utility lobbyists have been exerting increasing influence over the Missouri state legislature, rewriting the laws that are supposed to protect consumers.  Since 2003, investor-owned utilities have successfully lobbied for measures that permit seven unfair surcharges to be added onto our utility bills.  Energy monopolies love surcharges because they allow rates to up without a full audit by the Public Service Commission, and even allows rates to go up for one item during a period when the utility’s overall costs are going down.

This onslaught of extraordinary new ways to raise rates for electricity and natural gas has not even stopped in the face of the current deep recession.  In fact, 2009 may be the year that politicians succeed in overturning the citizen-led ballot initiative that banned Construction-Work-In-Progress (CWIP).  The anti-CWIP statute was passed by voters by a nearly 2-to-1 margin in 1976 and remains one of our most important consumer protection laws, prevents electric utilities from raising rates for power plants that are not yet providing power.

SB 228 and HB 554 would overturn the will of the voters and put in its place a new ratemaking system, one that is heavily tilted against consumers.  Large power plants, such as the proposed $6-9 billion Callaway II nuclear plant of AmerenUE, could be “pre-approved” and then new CWIP surcharges could be added to electric bills every three months during the approximate ten-year construction period.

It is estimated that these charges alone could raise current electric rates by as much as 40% before that power plant has even proven it can be operational.  And get this—the proposed legislation would even allow the utility to collect these CWIP charges is the power plant is ultimately cancelled and winds up serving no one.

Although the utilities claim that pre-paying saves money for consumers over the life of the plant, their calculations are flawed.  Moreover, such overblown claims do not take into account the cost of money for the ratepayers to come up with the extra cash upfront.  Their claims also assume that each consumer charged will be around to benefit from the power of a plant that could take more than a decade to build.  The legislation violates a bedrock principle of fair ratemaking in that the consumers who are benefiting from a power plant should be the consumers who are paying for that plant.

This legislation is also being supported by Kansas City Power & Light Company and Empire District Electric Company, which will surely be swift on the heels of AmerenUE in taking advantage of such a new rip-off ratemaking scheme.  It is important to recognize that these proponents of SB 228 are privately-held, investor-owned monopolies that do not have to compete for consumers and are already assured of an opportunity to earn a healthy profit—an authorized return on common equity that is usually in the double digits.  These utilities have also rewarded their CEOs well.  AmerenUE CEO Gary Rainwater received a total compensation package of over $5 million last year.  KCPL CEO Michael Chesser’s total compensation for 2008 was $3.5 million.

The purpose for allowing such high returns to a monopoly is compensation for managing the risk of providing power.  But they want to continue to reap high returns while passing the risk onto the rest of us.  In my book, that is the very definition of a bailout.  If captive consumers are going to be fronting the money for such large investments, essentially being forced to act as investors, then consumers should, at a minimum, be granted a return for their contribution to future power.

In another outrageous affront to consumers, Missouri’s natural gas companies are pushing legislation that would allow its uncollectible accounts to be expeditiously charged back to everyone else.  SB 299 would redefine the bad debt of non-paying consumers as “gas costs” and then be flowed through the purchase gas adjustment charge, which is currently limited to the wholesale cost of natural gas.  So as the recession makes it hard for an increasing number of households to pay their heating bills, the rest of us must pick up their unpaid tab even more quickly.  The goal is ensure that utility profits do not suffer even a blip.

While all eyes are trained on Congress and its many bailouts, few citizens seem to be aware of these massive bailouts that are under consideration right under our noses in Jefferson City.

Missouri’s energy debate is about to go nuclear.

A state lawmaker filed a bill in the Legislature on Thursday that sets the stage for a battle between utility interests who want to build a new nuclear plant and consumer groups that are leery of the costs.

The action comes the day after AmerenUE chief executive Tom Voss visited key decision makers in the Capitol to lobby for the bill.  Click here to read the entire St. Louis Post-Dispatch article which includes quotes from John Coffman, our lobbyist.

In 2001, Attorney General Jay Nixon named her to the board of directors of the new Missouri Health Foundation and she became its president. Today, the foundation has more than $1 billion on hand to help Missourians improve their health.

In 2006, Mrs. Slavin again became concerned at what she considered the lack of consumer influence to counter utilities and their allies in Jefferson City. She formed the Consumers Council of Missouri, a budding statewide group that speaks for consumers. Today, the group is fighting an effort by AmerenUE to reverse a state law preventing electric companies from charging customers for power plants before they become operational.

A corporation is a legal “person,” just like you. Maybe even better. Exhibit A is a bill passed last week by the Missouri House of Representatives:

— It allows utility companies to avoid complying with local zoning laws or with past court decisions that went against them.

— It permits a new surcharge on your gas bill to cover something that’s supposedly already figured into utility rates.

— And it allows those surcharges — for fuel costs, environmental compliance, infrastructure improvement and other expenses that are supposed to be built into rates — to stay on your bill for a longer time before utilities must file a full-blown rate case to explain and justify their entire financial picture.

Click here to read the full St. Louis Post-Dispatch editorial.

Consumer groups say phone deregulation bill hurts them

by Michael Sorkin of the St. Louis Post-Dispatch

A deregulation bill backed by cable and big phone companies sailed through the Missouri Senate’s Commerce Committee on Thursday, 8-0.

Consumer advocates oppose the bill (House Bill 1779), warning that it would wipe out many consumer protections and lead to higher monthly phone bills.

The legislators weren’t buying either argument. Please click here to read the full story.

Turn out the lights
Jeff Davis helped engineer a deal that resulted in a blatantly anti-consumer utility law in 2005.

He helped write the rules that dictate how the law can be used to fatten utility company bottom lines.

And when one of those utilities files a legal case to take advantage of it, he serves as a judge and helps give the yea or nay.

Please click here to read the entire St. Louis Post-Dispatch editorial.

Consumers are rejected in late night meeting with legislators

by Michael Sorkin, St. Louis Post-Dispatch

Consumers complain that they don’t get much respect from Missouri legislators, even in an election year.

A group of consumer representatives asked a key legislative committee to block surcharges that could be tacked onto consumer electric bills starting this year. Critics say it could add millions of dollars to monthly electric bills statewide.

The legislators agreed to hear the consumers — at 10 p.m. Tuesday, on April Fools’ Day. Please click here to read the full story.