Category: Utilities

Ameren Asks Legislature for an Expensive Fix for What’s Not Broken

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.

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Ameren Seeking Faster Payback On Building Projects

St. Louis Post-Dispatch, January 21, 2012

Ameren Missouri says legislation to undo 1970s-era consumer protections to help facilitate a new nuclear plant isn’t on its wish list this spring.

But don’t think the utility and its lobbyists arrived in Jefferson City without an agenda.

Warner L. Baxter, Ameren Missouri’s chief executive, sees an opportunity — and a need — to ramp up infrastructure spending. And, he said, the utility is looking for policies that encourage those investments.

“I think we have an opportunity in Missouri to modernize policies so we can modernize our energy infrastructure,” Baxter said in a meeting last week with the editorial board of the Post-Dispatch.

By policies, Baxter means changes in the way rates are set so Ameren can get paid more quickly for investments in power plants and the utility’s sprawling local power grid.

Ameren can seek to recover the cost of an investment in a new substation or power line only after the equipment is in place and working. Rate cases take about a year from start to finish, so it can be two years or longer for the utility to get reimbursed.

Baxter said the utility would like to see a policy similar to the infrastructure surcharge used by gas utilities for the past decade to recover costs more quickly.

The so-called Infrastructure System Replacement Surcharge, or ISRS, allows natural gas utilities to implement a surcharge with Public Service Commission approval to accelerate replacement of gas mains and lines.

Ameren executives were in the Capitol last week, discussing the idea with key legislators.

A bill is expected to be filed within the next several weeks, with Sen. Mike Kehoe, R-Jefferson City, and Rep. Jeanie Riddle, R-Mokane, as the primary sponsors. Kehoe and Riddle could not be reached for comment.

Consumer advocates are skeptical.

“(Utilities have) made no secret over the past five or six years that they’re interested in mechanisms to get more money more quickly,” said Public Counsel Lewis Mills Jr., whose office represents consumers in utility matters. “I don’t have a lot of sympathy for them. They talk like the regulatory paradigm we’ve had for 100 years is broken and it’s not. There’s no reason it needs to change.”

John Coffman, Mills’ predecessor as public counsel who now represents the Consumers Council of Missouri, has fought previous efforts to break apart the traditional ratemaking process in the state, including a controversial 2005 law that allowed utilities to pass through changes in fuel costs to consumers without a full rate case.

Examining one aspect of a utility’s cost structure in a vacuum is fraught with risk for consumers, he said.

Consumer advocates also say the ISRS charge for gas utilities was narrowly tailored and meant to encourage gas utilities to more quickly replace corrosion-prone cast iron and steel gas lines because of safety concerns. They worry electric utilities will seek a very broad definition of infrastructure, exposing customers to frequent rate increases.

Baxter said Ameren isn’t trying to escape regulatory oversight.

“We’re not losing sight of consumer protections,” he said. “We get that. We have no problem with it.”

Instead, Ameren officials have seen the benefit of the infrastructure surcharge. It’s helped the gas utility replace miles of cast iron gas mains more quickly than it would have otherwise.

“You don’t have the rate cases as frequently, it spreads them out and you reduce the administrative costs of that,” said Warren Wood, the utility’s vice president of legislative and regulatory affairs. “All of those are subject to (PSC) approval and review.”

Baxter said boosting infrastructure investment will also benefit consumers and the state by making the grid more reliable.

Ameren has significantly improved the reliability since storm-related mass outages in 2006, he said. But expectations are growing. And the existing power plants and grid are going gray. Much of the system was built in the 1960s and ’70s as air conditioning was becoming a fixture in homes and electricity demand was rapidly growing.

The time is right to accelerate programs to replace aging equipment, he said. With an anemic economy, interest rates are at historic lows and vendors and suppliers are hungry for business.

“When you’re going out to bid a project, better to have 10 bidders than two, or certainly one,” he said. “And you have skilled labor that’s ready to go.”

Not surprisingly, the nexus between energy investment and the health of the state’s economy has been a frequent topic for House Speaker Tim Jones, R-Eureka, who lists energy among his top priorities. He did not respond to emails or phone messages seeking comment on the Ameren proposal.

Jones said in his blog this month that the House would work on policies that threaten coal use, enhance the state’s ability to compete in the race to develop next-generation nuclear reactors and help consumers.

Missourians for a Balanced Energy Future, a lobbying group that organized to help promote the expansion of nuclear power in Missouri, has shifted its attention to promoting an electric utility infrastructure bill as a way to modernize the grid and create jobs.

“We have to do something to upgrade our infrastructure,” said Irl Scissors, MBEF’s executive director.

Baxter said Ameren remains interested in helping commercialize the first small-scale nuclear reactors. After losing out on a federal grant last year, the utility and partner Westinghouse plan to seek funds expected to be made available in 2013.

But, he said, the utility has no intention of seeking a repeal of the 1970s-era construction-work-in-progress (CWIP) law that prohibits utilities from charging consumers for equipment before it is put in service. The law has been seen as a barrier to Ameren’s plans to expand nuclear power in Missouri.

Legislative skirmishes over the CWIP law have become an annual rite of passage in Jefferson City in recent years.

Said Baxter: “One thing I can say with absolute certainty: the CWIP deal — that’s not being touched. That’s not something that’s on our radar screen.”

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Your Ameren Missouri Electric Bill Will Go Up Again

St. Louis Post-Dispatch, December 13, 2012

The new year will bring higher electric rates for 1.2 million Ameren Missouri customers.

The Missouri Public Service Commission voted 3-1 Wednesday to approve a 10 percent, $260.2 million rate increase for the St. Louis-based utility, making it that much more expensive for consumers to run their air conditioners, watch television and wash clothes.

The increase is expected to take effect Jan. 2. On average, electric bills for the typical Ameren residential customer will rise by about $10 a month. The calculation is based on average usage of 1,100 kilowatt-hours a month. Amounts will vary by customer based on actual usage.

In February, Ameren filed for a $376 million, 15 percent increase, arguing the increase was necessary to cover higher fuel costs, pay for improvements to the local electric grid and to implement energy-efficiency programs.

Wednesday’s decision marks the fifth electric rate increase for Ameren Missouri since May 2007. Those increases total more than $800 million, not including interim rate adjustments for changes in prices of fuel and purchased power.

Even including Wednesday’s approved increase, Ameren Missouri’s rates remain below national and regional averages, and the lowest among investor-owned utilities in the state, said Warren Wood, the utility’s vice president of legislative and regulatory affairs.

Ameren agrees with certain parts of Wednesday’s ruling and disagrees with other parts, Wood said. But the utility said it wasn’t ready to offer a broader opinion because Ameren executives were still reviewing the 120-page order.

Lewis Mills Jr., the state’s consumer advocate on utility matters, said the utility got more than it deserved. The decision was “pretty favorable” for Ameren, he said.

It was inevitable that some rate increase would be approved based on information provided to the commission, but the amount “shouldn’t have been anywhere near this high,” Mills said.

The increase approved Wednesday is more unwelcome news for St. Louis-area consumers who have watched utility bills rise as incomes for many fall or remain static. In fact, inflation-adjusted median household income in the St. Louis area fell 10 percent from 2007 to 2011, according to recent census figures.

The squeeze is especially tough for lower- and fixed-income customers who sometimes are forced to choose between running their air conditioners and buying groceries or medicine — a point raised at some of the dozen public hearings held across Ameren’s service area this summer.

More than $100 million of the rate increase will go to pay for higher fuel costs, much of it for coal hauled by rail to Missouri power plants from sprawling mines in Wyoming.

PSC Chairman Kevin Gunn said the commission by statute has little discretion to deny Ameren increases in fuel costs if the record shows it made prudent purchasing decisions.

“I could say ‘no,’ but they (Ameren) would go across the street and the court would overturn that,” he told the Post-Dispatch.

Another big piece of the rate increase — perhaps a silver lining for consumers — is $89 million that will go for energy-efficiency programs.

Ameren is set to kick off the largest energy-efficiency program in Missouri’s history in January, a historic initiative that was agreed to by the utility and consumer and environmental groups. The program will provide incentives for consumers to reduce energy use, such as rebates on energy-efficient appliances.

Gunn said the efficiency programs are a way for consumers to shrink their bills even as rates go up.

“We’re giving much more control back to the consumers to control their energy use,” he said. “The goal is for customers to be able to mitigate a large part of this increase.”

Ameren got much of what it sought Wednesday, but not everything.

The commission denied the utility’s request to increase the “customer charge,” or fixed charge, on residential bills to $12 from the current $8 a month. Customers pay the fixed charge no matter how much energy they use to compensate the utility for expenses it incurs regardless of how much energy it sells.

The proposed increase would have cost all customers an extra $4 a month even before they turned on a light switch. And that would send the wrong message at a time when consumers being steered to reduce energy use, the order said.

The PSC also reduced Ameren’s maximum return on equity to 9.8 percent from 10.2 percent — the level authorized in the last rate decision 18 months ago. The adjustment seems insignificant, but it adds up to tens of millions of dollars of annual profit potential for the utility.

Gunn said the rate approved is below the national average and reflects lower interest rates and borrowing costs in a sluggish economy. Still, not all commissioners were satisfied.

PSC member Robert Kenney, of St. Louis, cast the lone dissenting vote Wednesday, arguing that Ameren’s maximum return should have been further reduced because the utility faces less risk when it comes to recovering costs, such as tree trimming and storm recovery.

“The Commission over the last several years has made it easier, faster and less risky for Ameren Missouri to collect money from its customers,” Kenney said. “As a result, consumers will pay more than they should.”

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PSC Decision Lets Ameren Keep Charging Consumers For Construction

Along with a $260 million rate increase, Ameren Missouri will be allowed to continue to charge customers for the rising costs of transmission projects still under construction. Currently, the costs are about $26 million but are expected to rise 24 percent each year.

On Wednesday, the Missouri Public Service Commission approved a $260 million rate increase for Ameren, about two-thirds of what the company had sought. The hike goes into effect Jan. 2.

Ameren officials were contacted for this article but were unable to comment.

Although it is illegal in Missouri to charge customers for construction projects that have not yet brought in revenue, the PSC, which rules on utility rate cases, decided that costs related to the construction of transmission facilities belong in the customers’ fuel adjustment charge (FAC). Ameren had been placing those costs in the customer fuel charge since they began  in January 2012.

Midwestern Independent System Operators

The commission ruled that the charges should be allowed because the costs are imposed on Ameren by the Midwestern Independent System Operators, a regional transmission organization that works to provide safe, reliable and affordable electricity within 11 states and a Canadian province.

Still that decision rankles some.

Former state Sen. Joan Bray, who is now the chair of the Consumers Council of Missouri, asked, “What can they do within state law? Can they completely usurp it? I find it very troubling.”

Bray said that the members of the Consumers Council of Missouri will explore  how they can get the issue sorted out on behalf of customers.

Read more here.!/content/28481/ameren_fuel_charges_decision?coverpage=2330

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Ameren Seeks Another Surcharge

This new surcharge follows historic rate increases which between 2006 and the end of 2013 will cost Ameren customers $2.8 billion due to fuel surcharges passed by the legislature and rate hikes approved by the Public Service Commission. To read this bill, go to

FERAF, of which Consumers Council is a founding member, has also announced its opposition to SB207.

Consumer Group Will Fight Proposed New Surcharge on Missourians’ Electric Bills

Jefferson City, MO – The Fair Energy Rate Action Fund (FERAF) today announced its opposition to a new surcharge on electric bills being proposed in legislation being pushed by Missouri utilities. The new surcharge in SB 207 would cover everything from transmission to new energy generation.

An analysis by FERAF shows that if this surcharge had been in place since 2007, it would have cost Ameren Missouri consumers at a minimum an additional $200 million on their electric bills above and beyond what they already paid. This doesn’t include how much more business and residential customers would have paid to the other investor owned utilities.

This proposed surcharge comes on the heels of historic rate increases in Missouri. From 2006 to the end of 2013 customers served by Ameren will have paid roughly $2.8 billion more to the company due to the fuel surcharge passed by legislators and a series of rate hikes approved by the Public Service Commission.

This current proposal would make it even easier for investor-owned utilities to raise rates on Missourians by bypassing the traditional ratemaking process and instead engaging in single-issue ratemaking. Single-issue ratemaking causes rates to rise dramatically because it only allows regulators to consider costs by utilities in a single area, like infrastructure, as opposed to considering all factors, including possible areas of savings, as in a traditional rate case.

If utilities are able to engage in single-issue ratemaking on both their fuel and infrastructure costs, which make up the vast majority of their rate base, the duties of the Missouri Public Service Commission will become practically obsolete. These rate increases will become automatic with no discretion from the Commission and shift the burden of proof that currently rests with the utilities to show why they need a rate increase to the residential and business consumers that will be overcharged.

Many credit Missouri’s fair ratemaking process in holding down utility costs. Both consumer and business energy consumers warn that the new infrastructure surcharge could undermine Missouri’s economic advantage, crucial in today’s business climate and tight budget times being experienced by senior citizens, persons with disabilities, and low wage working families.

“Adding an expensive new surcharge to Missouri families and businesses electric bills is one of the worst things lawmakers could do in our current economy,” said Chris Roepe, FERAF Executive Director. “The impact on the pocketbooks of Missouri families and businesses cannot be ignored. The last thing Missourians need is for the legislature to allow another surcharge to be added to their electric bill.”

The state legislature already authorized a fuel surcharge added to many Missourians’ electric bills. This surcharge has already cost Missourians $478 Million since 2006, when utilities were permitted to assess it. This newly proposed surcharge would be even more costly to consumers because the utilities virtually restrict nothing in what may be included in the surcharge.

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Ameren Hikes Rates, Surcharges $1.1 Billion During Recession – Now It’s Asking Legislature To Get In Your Pocket Again

Since 2007 consumers have paid Ameren Missouri a cumulative total of more than $2.8 billion in higher rates and fuel surcharges. That means the average family is paying $400 more a year for electricity.

Now Ameren and the other electric companies are asking Missouri lawmakers to pass Senate Bill 207 to give them yet another surcharge. Ameren’s income will go up at least $350 million, and the average family will be paying $125 more.

Click on Take Action > Action Alerts to find out more about this new surcharge and how you can tell your senator how BAD it is for consumers!

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CCM Files To Intervene In Laclede Gas Rate Case

Consumers Counsel of Missouri filed papers Monday, January 14, 2013, to participate in the process in which Laclede Gas Co. is asking to increase the rates it charges customers.  The company is asking for an increase of $48.4 million a year, which will cost the average residential customer $4.93 a month.  The case takes place before the Public Service Commission.

As the case proceeds CCM will be asking the public to participate through testimony at public hearings and letters to the PSC.  Watch for more details on this website.

Read more details at this link.

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Chair Gunn Leaving Public Service Commission

St. Louis Beacon, January 16, 2013

The head of the Missouri Public Service Commission will depart from his post later this spring, a move that will cause another vacancy for the powerful agency that regulates the state’s utilities.

Kevin Gunn, a Webster Groves native, told the Beacon on Wednesday he will leave the PSC on or around March 1. Among other things, the commission is responsible for deciding utility cases as well as crafting and enforcing various administrative rules.

Gunn’s decision gives Gov. Jay Nixon another opportunity to appoint somebody to the five-person PSC. Earlier this month, he appointed former state Sen. Bill Kenney, R-Jackson County, to fill a vacancy.

In an interview, Gunn said that he had spoken with Nixon about leaving the PSC before the most recent election. But he decided to stay on to finish up some pressing matters before the commission.

While he is planning to leave March 1, Gunn said he’d be willing to stay longer if necessary.

Gunn said family concerns — and the grind of commuting from the St. Louis area to Jefferson City every week — were a factor.

He said he would rather be “more involved watching my boys grow up instead of driving an hour and 45 minutes to be in Jeff City on a regular basis.”

“I’ve been doing this for about five years. We’ve done a lot a good stuff. The agency is in really good shape. And we’ve gotten pastAmeren and Kansas City Power and Light – we’ve gotten past these big rate cases,” he said. “My kids are 10 and 7, and I’m kind of looking forward to getting back to St. Louis.”

Gunn stressed that he didn’t have a job lined up or any specific idea of what he plans to do next. State statutes, he said, prohibit him from taking job solicitations from law firms with clients under the PSC’s jurisdiction. He also said that he must wait at least year before lobbying or appearing before the PSC.

“The beauty of this and the fortunate place I’m at in my life is that I have the ability to take a little bit of time to figure out what’s next,” Gunn said. “And so, I am going to take that time. I haven’t foreclosed any possibility. I think the most likely possibility is the private sector. But I really haven’t foreclosed anything. The rules are set up so that you don’t trade on this office. And that’s something that I’m steadfastly trying not to do. I want to make sure I do everything right.”

Among other things, Gunn was a longtime aide to then-U.S. Rep. Dick Gephardt, D-St. Louis. He also was elected during the 2000s to the Webster Groves City Council.

Gunn was actively raising money in 2007 to run for a state Senate seat then held by Senate President Pro Tem Michael Gibbons, R-Kirkwood. But that bid ended when Gov. Matt Blunt, a Republican, tapped Gunn to the PSC — a move that left Senate Democrats fuming.He was eventually confirmed though, and Nixon made him the chairman of the PSC in 2011.

In addition to helping decide various rate cases and crafting the guidelines for a renewable energy mandate, Gunn also was involved in the long-running legislative discussion over bills aimed at building another nuclear reactor in Callaway County.

Gunn said serving on the PSC was “best job he ever had,” adding that it was the “perfect intersection of law and public policy.” But he also said that doing job correctly meant making a lot of people unhappy.

“You are granting rate increases, because the law requires you to do that and utilities need that and because the job requires you to do that, even though you know you’re in tough economic times, even though you know that there may be individuals who may not be able to afford that. That’s the hardest part,” Gunn said.

“And you’re saying this is going to be very hard for these people in the next six months or the next year,” he added. “But what you try to do is make decisions that are going to benefit all consumers and utilities and all businesses and all ratepayers – not only in the next year but in the next 20 years or the next 30 years.”

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Ameren Includes New, Questionable Costs In Customer Fuel Charge

St. Louis Beacon, December 11, 2012

Even though Missouri law bars utilities from charging their customers for construction projects that haven’t produced any power, Ameren Missouri has tacked $10 million onto Missouri customers’ bills for power lines that it hasn’t even started to build yet.

The utility estimates that this cost will increase to $53 million by 2016.

The Public Service Commission staff and Office of Public Counsel, which represents the ratepayer in these hearings, had been unaware of a significant portion of these charges until after they had begun to flow into the customers’ bills.

On Wednesday, the PSC approved a $260 million rate increase for Ameren Missouri, about two-thirds of what the company had sought. The hike goes into effect Jan. 2.

Read more here. 

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