By Jason Crowell in the St. Louis Post-Dispatch, March 27, 2013

As a former legislator who fought to ensure Missourians kept their hard-earned money, I believe SB 207 and HB 398 are horrible public policy. It is legislation that will hit Missourians the hardest; in their pocket books with a new surcharge on electric bills and faster unnecessary rate increases. I feel so strongly about this new surcharge that will cost Missourians their hard earned money that I ask you to oppose it with me.

The only thing worse than more taxes on Missourians is to institute stealth taxes that take away the economic freedom and opportunity of Missouri families and businesses.

Unfortunately, despite historic majorities in the Missouri legislature, this is precisely what Republicans are considering doing by adding an expensive new surcharge to Missourians’ electric bills.

The proposed new “infrastructure” surcharge is little more than a vehicle for monopoly utility companies like Ameren, Empire Electric & KCP&L, which already operate on the very fringe of our capitalist free market economic system, to take more hard earned money out of Missourians’ pockets. Even worse, this is for the same exact energy we receive today, they just want you and me to pay more for it.

This greed is even more infuriating considering just how good the utilities have it today. Consider Ameren Missouri, which:

• Received an 11.66 percent profit in 2012, despite enjoying the monopoly benefits of zero economic competition.

• Ameren Corporate’s top five executives received over $11.4 million in non-salary bonuses and compensation in 2012 from ratepayers.

• Has raised rates five of the last six years, a 43 percent increase.

• Amassed huge corporate profits off Missouri customers, including over $400 million in 2012.

• Already began charging a fuel surcharge on their customers’ electric bills that have cost $384 million.

The truth is; these utilities could accomplish everything its shareholders desire under the current regulatory system that has long kept Missourians from being gouged by monopoly utilities. However, these new surcharges in the utilities legislation eliminate the few remaining consumer protections in law to give utilities an easier and more rapid way to raise our rates.

Let me give you an example of why this is horrendous public policy. In 2011 the Missouri Public Service Commission denied a request by Ameren to have ratepayers pay for part of the rebuilding of Taum Sauk reservoir. In denying the request, the commission noted that Ameren had taken responsibility for the collapse, which led to a criminal investigation, and huge civil settlements. If instead the proposed infrastructure surcharge had been in place, Ameren would have been able to force ratepayers to start paying for the cost of rebuilding Taum Sauk as part of a surcharge; despite the fact Ameren’s neglect caused this catastrophe.

Giving the utility companies a blank check to raise rates and pile on surcharges will cost Missourians hundreds of millions of dollars, while at the same time provide a disincentive for these utilities to operate more efficient. As long as Ameren, Empire and KCPL are receiving double-digit profits, the more money they spend, the more profits they can realize. This is seen through the inclusion of the cost overrun “tracker” part of this new legislation in order to shift responsibility for cost overruns from the utilities to the consumers.

Republicans used to believe that our economy functioned best when families and small businesses were allowed to decide how to spend more of their hard earned money. Now we see the very legislators who as candidates last fall extolled the virtues of fiscal conservatism and economic freedom, now hiding behind fees and surcharges and tax hikes in order to rob Peter to pay Paul. It is up to all of us to keep the growth of government, taxes and fees at bay. Because when it comes right down to it, a tax is still a tax, regardless of what they are calling it nowadays in Jefferson City.

Please join me in contacting your state legislators and let them know you are against this back door tax increase, no matter what the utilities and politicians call it.

Jason Crowell, an attorney in Cape Girardeau, is a former Missouri state senator.

St. Louis Post-Dispatch, March 28, 2013

In January 2007, Tom Dempsey was one of 50,000 Ameren Missouri customers in St. Charles County whose homes lost power after a fierce winter storm hit the St. Louis region. Mr. Dempsey’s home was without power for 89 hours.

Like many other Ameren customers, he was angry. Unlike most other Ameren customers, he was in a position to do something about it. At the time, Mr. Dempsey, a Republican, was the majority leader of the Missouri House.

“I have four words for Ameren,” he said at the time. “Get your act together.”

Time, and campaign donations, have healed those wounds. Today Mr. Dempsey is president pro tem of the Missouri Senate. Ameren is one of his most generous corporate donors, having funded Mr. Dempsey’s campaign accounts with more than $16,000 since September of last year. For Ameren, it was money well spent.
On Monday, Mr. Dempsey sent a letter to the Public Service Commission asking it to do a curious thing: Cancel plans to provide legislators with detailed information about a bill Ameren is pushing through the Legislature.

Senate Bill 207 would tilt the regulatory environment in Ameren’s favor in two significant ways. First, it would create a new surcharge to allow Ameren to charge consumers more for investments in infrastructure, like new power plants and transmission lines. The surcharge would enable Ameren to recover costs more quickly than a traditional rate case does, thus decreasing Ameren’s risk and putting the burden on consumers.

Second, the bill would get rid of incentives that reward monopoly utility companies for keeping keep their costs down. In effect, Ameren would be rewarded even if its spending surpasses limits suggested by the Public Service Commission.

Consumer groups, from big businesses like Anheuser-Busch InBev, to organizations representing senior citizens on fixed incomes, have predicted the legislation would raise electric rates with little benefit to ratepayers. Our analysis concurs.

Ameren, of course, disagrees. The company says the legislation will spur investment and create jobs.
The great thing about utility legislation is that there is a way to get beyond the he-said, she-said arguments that dominate most political discussion. The law establishes the Public Service Commission as an unbiased arbiter of such matters. The commission’s job is to analyze the full scope of rate requests made by utility companies, balancing the need for energy with protections for consumers. The law not only allows the PSC to help lawmakers analyze such complicated issues, it encourages it.

On March 15, Sen. Eric Schmitt, R-Glendale, asked the commission to investigate the various claims about what SB 207 would and wouldn’t do and gave lawmakers an unbiased look at the facts.

The PSC, in one of its first acts under new chairman Robert Kenney, a Democrat, agreed to open such a docket. It was a good move. Unfortunately, Ameren pushed back hard, using its influence with lawmakers to persuade several of them, including Mr. Dempsey, to ask the PSC to cancel its fact-finding mission.

That’s right: These lawmakers want to consider SB 207 with less information. We know they are data-averse — their cut-the-income-tax bill (SB 26) proves that — but this is ridiculous.

It almost worked.
On Wednesday, under pressure from commissioner Terry Jarrett, a Republican, the PSC almost took Mr. Dempsey’s advice. Fortunately, the PSC voted to keep its investigation of SB 207 open. For now. But it canceled a planned public hearing and limited the scope of its investigation.

That’s unfortunate. Still, the PSC staff will offer an analysis of the bill. That information should help guide lawmakers.

“A full explanation of the facts simply makes sense,” Mr. Schmitt told us. “That shouldn’t scare anybody.”

Mr. Schmitt is right. The old Tom Dempsey would have agreed with him. Just three years ago he signed a letter asking the PSC to conduct a similar fact-finding mission in an unrelated utility matter. And back in 2007, when he was still angry over his 89-hour power outage, Mr. Dempsey sponsored a bill to limit Ameren’s ability to collect a fuel surcharge in cases when the PSC found that the company was surpassing its earning limits.

At the time, Dempsey called on the PSC to “restore public confidence before granting any increase.”

There’s nothing like an unbiased examination of the facts to restore public confidence. Mr. Dempsey was right to ask for it then. Mr. Schmitt is right to ask for one now.

Consumers didn’t fare so well under Ameren Missouri’s request for higher rates in 2013.  Small gains for consumers were overwhelmed by Ameren’s larger gains.

• Consumers Council convinced the Public Service Commission to keep Ameren’s minimum customer service charge at $8.00 instead of Ameren’s proposed $12.00.  All customers pay this charge, no matter how much energy they use.
• The Public Service Commission granted Ameren a profit of 9.8 percent.  That is higher than we wanted but still the lowest in Missouri history.  Ameren had asked to increase its profit (return on equity) to 10.75 percent.  Consumers Council and our allies advocated for 8 percent.
• Consumers lost when the commission decided to approve a 10 percent, $260.2 million rate increase.  The increase took effect Jan. 2. On average, electric bills for the typical residential customer will rise by about $10 a month.
• On the rather confusing issue of what is “transmission” and what is “transportation” the Public Service Commission sided with Ameren.  It is allowing the cost of new transmission projects to be added to a surcharge on all consumers – the fuel adjustment clause (FAC).  CCM’s position is that this illegal because the law allowing a FAC states “transportation” means moving a product and “transmission” does not involve the transportation of any product – any fuel.

In addition, the allowed transmission projects may violate Missouri’s law that doesn’t allow utilities to charge customers for building projects until they are in operation – commonly know as the “construction work in progress” – or CWIP — law.  CCM is considering appealing this issue at the state Western District Court of Appeals.

St. Louis Post-Dispatch, March 23, 2013

ST. LOUIS • Ameren Missouri, fresh off a $263 million electric-rate increase in December, is asking regulators for an additional $51 million in revenue.

The adjustment would increase bills for the typical residential customer by an average of $6.07 a month beginning in June, the utility said in a filing with Missouri Public Service Commission on Friday afternoon. Ameren defines the typical customer as one who uses 12,000 kilowatt-hours a year.

Electric rates and Ameren’s profitability have come into focus in recent weeks because of legislation being pushed by investor-owned utilities that would allow them to implement surcharges to get faster payback on infrastructure projects.

The most recent request to increase revenue is part of a separate surcharge approved by the Legislature in 2005 to help utilities more quickly recover fuel costs.

St. Louis-based Ameren, which sells electricity to 1.2 million customers in Missouri, files papers three times a year for permission to adjust fuel costs up or down. Friday’s filing, known as Fuel Adjustment Charge, reflects the four-month period ended in January.

The adjustments generally reflect changes in coal and natural gas costs and purchased power expenses. Those costs are offset by any revenue the utility receives from sales of excess power to customers outside of its service area — so called “off-system sales.”

In an email response to questions, Ameren Missouri spokeswoman Rita Holmes-Bobo said the requested increase is mostly the product of slumping wholesale power prices, which have led to lower off-system sales.

Unlike a traditional electric rate case, which takes almost a year and involves a thorough audit of a utility’s books, a fuel surcharge request is processed within a few months and with less scrutiny. Only after the surcharge is implemented are the utility’s fuel purchasing practices more carefully examined during a prudence review, said Lewis Mills, Missouri’s public counsel.

Mills, whose office represents consumers in utility cases, had not yet reviewed Ameren’s filing.

The fuel surcharge appears on Ameren bills as “Rider FAC.”

St. Louis Business Journal, March 22, 2013

Editor:

I beg to differ with your editorial regarding Ameren Missouri’s bill before the General Assembly this year asking for a new surcharge that would let it get more money faster from customers to build new facilities.

Missouri has benefited from a fair ratemaking process for many decades. In a regular rate case, all financial aspects of a utility — its revenues and expenses — are examined to determine a rate increase and a return on equity. One way to look at the rationality of the system is to note that over time, the Public Service Commission has tended to grant a utility about half the rate it asks for. But, in recent years, with term limits rotating legislators unschooled in the complexities of utility law and regulation through the Capitol, the proverbial level playing field has begun to slant steeply upward, away from consumers.

In 2005 the utilities convinced the Legislature to let them add special issue surcharges to customers’ bills. As a result, in the past five years Ameren’s customers have seen their rates rise 43 percent from four rate cases and the regular imposition of a fuel surcharge. This spanned the entire recession, when Missouri’s families struggled with job losses and underemployment and many businesses wrestled with staying afloat. Meanwhile, Ameren was granted a profit of around 10 percent. The surcharge Ameren seeks is far more expansive than that allowed water and gas utilities.

Now it comes to light that last year Ameren exceeded its allowable profit by $80 million. At the same time, the company began arguing that it needs to shift the risk for building new projects to customers by levying a surcharge.
At no time during the rate case that concluded in December did the company present a list of capital projects that it couldn’t afford to build. Quite the opposite. Its CEO testified under oath that the company had no capital projects it needed to pursue immediately to provide safe and adequate service.

But in January it came to the General Assembly, surcharge bill in hand. Under Ameren’s proposal, Senate Bill 207 and House Bill 398, rates would no longer be given a thorough audit before increasing. What consumer protections that remain would be bypassed; no longer could we expect the Public Service Commission to scrutinize rates and reduce unreasonable and questionable expenses. Rates would essentially be put on autopilot.

Your editorial presents a misreading of the PSC analysis. In fact, Ameren Missouri customers would pay $40 million more in the first year of an infrastructure surcharge. And, as pointed out by the state’s official consumer watchdog, the Office of the Public Counsel, the surcharge would automatically rise each year after.

Yes, it is in the self-interest of consumer groups to oppose Ameren’s grab for fast cash. Those consumers are millions of Missouri households straining under financial pressures, as well as Missouri businesses who aren’t rebounding from the recession, while Ameren gives its CEO a 9 percent increase in his compensation.

Joan Bray, Board President, Consumers Council of Missouri

Associate Press, March 2, 2013

Gov. Jay Nixon has appointed Robert Kenney , of St. Louis, to head the Missouri Public Service Commission .

Kenney has served on the regulatory commission since 2009. As chairman he replaces Kevin Gunn, who announced in January he would resign from the PSC effective Friday.

The Public Service Commission regulates investor-owned utilities providing electricity, natural gas, water, sewer and telephone services . Governors appoint members of the five-member commission and the chairman.

Kenney is an attorney. Before joining the PSC, he was chief of staff for Attorney General Chris Koster. When Nixon was attorney general, Kenney specialized in consumer protection cases.

Editorial, St. Louis Post-Dispatch, February 26, 2013

Ameren Missouri performed admirably during the snow and ice storm that swept through the St. Louis region last Thursday.
A mere few thousand area residents were without power for relatively short periods of time due to downed lines or other electrical outages. Investments made by the investor-owned utility since its pitiful performance during a series of storms in 2006 and 2007 paid dividends.

The 2006 ice damage, of course, was significantly worse than this year’s. Hundreds of thousands of St. Louisans were plunged into darkness and cold, some for a week or more. Since 2007, the company has invested more than $1 billion in burying power lines, replacing light poles and improving its transmission grid.

So Ameren has proved that it can spend the money it needs to upgrade its system — and have that money repaid through the standard rate-making process. That makes the company’s latest attempt to squeeze consumers seem altogether unnecessary.

As it has each of the last few years, Ameren has filed a bill in the Missouri Legislature that it portrays as a way to bring jobs to the state, advance the state’s energy policies and improve Ameren’s ability to invest in future infrastructure needs.

This year’s Ameren bill is slightly different from early iterations, but it has this in common: Like the earlier bills, it would give the company permission to bypass the rate-making process and charge customers for improvements on a pay-as-you-go basis.

This year, Ameren is asking lawmakers to pass a new surcharge, which Ameren compares to one passed by the Legislature for gas and water companies in 2003. The surcharge would allow Ameren to recoup its costs of investment in transmission lines and other investments more quickly than the traditional rate case process does. If passed, it would signal Wall Street that Ameren could more easily raise money from consumers and thus reduce the company’s borrowing costs.

One of many problems with Senate Bill 207, which passed out of committee last week, is that Ameren’s proposed surcharge is really not much like the gas and water surcharge at all. The definitions in the bill allow Ameren to use the proposed surcharge to collect revenue for nearly any sort of investment it would make. Worse, the bill proposes changes to Missouri’s regulatory environment that would reduce, if not entirely erase, incentives for the electric monopoly to control its costs.

That’s why consumer groups are opposing this year’s Ameren legislation, much as they did last year, and the year before that, and the year before that, when the company was seeking a weaker regulatory environment to build a nuclear plant that the market won’t support. That history is key to getting to the bottom of what Ameren really wants: To enjoy the protections of its monopoly status while minimizing regulatory oversight.

As a regulated monopoly, Ameren must make most of its future plans known, years in advance. It has to go before the Public Service Commission and other regulatory bodies and file detailed paperwork outlining its intentions and documenting its costs.

Nowhere in its existing files at the Public Service Commission is a new plan that calls for a massive infrastructure investment. Indeed, in getting five rate increases in the last six years from the Public Service Commission, Ameren had to demonstrate that it had been prudently investing in its ability to provide safe and reliable power. So now it needs a special infrastructure surcharge to do what it already has been doing?
In effect, Ameren’s success in keeping power on during recent storms belies its sales pitch to lawmakers. The system isn’t broke, but Ameren wants the Legislature to fix it, anyway.

The worst part of Senate Bill 207 has nothing to do with a new surcharge. The bill also would allow Ameren to recoup spending that the utility might make in a variety of categories, including labor, above the limits currently deemed prudent by the Public Service Commission. What this change, referred to as a “tracker,” would do is reduce the incentive that Ameren executives have now to control costs. It would take away some of the leverage held by regulators.

This is Ameren’s Holy Grail. The one constant between its proposals when it was selling a nuclear revival and the one in which it pretends to be a gas or water company, is that every bill contains language that would weaken the role regulators have in protecting consumers.

Getting “regulators” out of the way of “job-creators” has great appeal for the Republican-controlled Legislature, even though the argument is bogus. Ameren Missouri is no traditional swashbuckling capitalist “job creator.” It’s a regulated monopoly. The rates it charges have an effect on everything that other companies charge for their goods and services.

It’s why those companies, along with consumer groups that represent senior citizens on fixed incomes, oppose attempts to erode Missouri’s regulatory environment for investor-owned utilities.
We join those groups in opposing Senate Bill 207.

When Ameren shared its plans to seek a new surcharge with us this year, we held out hope the utility company would seek a very limited change to the law that might find some support with consumer groups. Instead, it followed old habits of seeking massive change with little justification.

The record shows Ameren is doing just fine in the current regulatory environment. Five rate hikes in six years is Hall of Fame-level stuff.

Ameren Missouri’s profits are meeting or exceeding expectations. Its executives consistently rake in millions of dollars in bonuses. Its investment in its infrastructure, under the current system is keeping the lights on.

The current system works for everybody. The Legislature should leave it alone.