Robert Kenney Takes Helm at PSC

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.

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Missouri Lenders Find Ways to Avoid Title-Loan Regulations

St. Louis Post-Disptach, August 1, 2010

Sandra Ahmedin, 65, was broke, and the rent was due. After deciding a car-title loan was her only option, the north St. Louis woman borrowed $800.

She’s paid back close to four times that much, but she hasn’t reduced the loan’s principal. Although she stopped making payments — “I’ve paid enough already,” she insisted — she fears the lender, Missouri Title Loans, will seize her 2001 Dodge Intrepid.

This wasn’t supposed to happen in Missouri, say consumer advocates and lawyers representing borrowers such as Ahmedin. Nine years ago, legislators changed the state’s title-loan law to limit how many times lenders can roll borrowers’ debts into new, expensive loans. The aim was to keep borrowers from being trapped in a cycle of high-interest debt.

But Missouri Title Loans and dozens of its competitors have avoided those restrictions by classifying what seem to be title loans as different types of consumer loans that have less burdensome rules. And they do this even when the loans are marketed as title loans and companies bill themselves to consumers exclusively as title lenders.

Lawyers seeking to stop this practice say they believe state regulators have allowed lenders to overcharge thousands of Missouri consumers to the tune of hundreds, even thousands, of dollars each.

When borrowers such as Ahmedin sign up for a loan, they surrender their vehicle’s title and a set of keys. If they don’t pay, Missouri Title Loans can take the car.

Yet Ahmedin’s debt, according to the lender and the state, isn’t a title loan. It’s a ‘small loan” — a different type of consumer debt that, under Missouri law, comes with fewer safeguards.

Missouri Title Loans isn’t unique.

More than 20 percent of Missouri’s 298 licensed title lending locations — lenders must obtain a separate license for each office they operate — are licensed to deal in small loans, and about a third of the licensed title lenders also peddle installment loans.

And there are 115 other lenders with the word “title” in their names — companies such as Title Cash of Missouri, Title Lenders of Missouri, Title Loan Co. and TitleMax — that aren’t licensed at all as title lenders. These companies deal exclusively in other, less regulated loan types.

According to Missouri regulators, there’s nothing wrong with this. They say lenders can dole out short-term, high-interest loans in exchange for vehicle title and keys — the common definition of a title loan — but classify the loans as something else.

Because the companies aren’t required to turn over annual lending data to the state, it’s impossible to know how they classify their loans.

And, for borrowers, it’s hard to recognize which loan type is being offered.

For instance, buried in the fine print of a Missouri Title Loans contract, there’s just one clue indicating the product isn’t a title loan: “This loan is being made pursuant to Missouri Revised Statute 367.100.” (That refers to state law covering pawnbrokers and small loans; title loans are governed by the 367.500 statute.)

Lawyer John Campbell, who represents three Missouri Title Loans borrowers, said the company shouldn’t be able to avoid restrictions on title loans by assigning them a different name.

“If it looks like a title loan, it smells like a title loan and it works like a title loan; it’s a title loan,” he said.

Part of Campbell’s suit to end the practice recently was argued before the Missouri Supreme Court, and a decision there could come down as early as this week. At issue is whether a class action — either in front of a judge or an arbiter — can be brought against Missouri Title Loans, despite a clause in the loan agreement requiring individual arbitration.

That, Campbell said, would be a first step toward either getting a court to close the regulatory loophole or making it too costly for lenders to avoid the Title Loan Law.

With 28 licensed locations, Missouri Title Loans is a subsidiary of Community Loans of America, an Atlanta-based company that operates short-term loan shops across the country.

Terry Fields, a vice president at Community Loans, said someone at the company would return a reporter’s call. No one did, and Fields’ boss — President Robert Reich — did not respond to a request for comment.

NO DROP IN PRINCIPAL

Ahmedin receives about $900 per month from Social Security. In March, she turned to Missouri Title Loans to catch up on her rent payments, which Ahmedin says she couldn’t pay because of medical bills.

She qualified for a one-month, $800 loan with a 300 percent annual interest rate. “They tried to get me to borrow more money, but I didn’t need more.”

When the loan came due a month later, Ahmedin paid $230 in interest but didn’t have the money to pay back the principal. So she renewed the loan.

“Every time I would pay, it was like the loan wasn’t going down at all,” said Ahmedin, who had to cut back on groceries and skip other bills to pay the interest on loan renewals.

In total, she made at least 15 monthly payments before she stopped, according to records reviewed by the Post-Dispatch.

If Ahmedin’s loan was a title loan — not a small loan — Missouri law would require the principal to shrink after the second renewal.

The principal of the third renewal — and any subsequent one — must drop by an amount equal to 10 percent of the first loan’s principal.

The reason is simple: “The General Assembly has clearly indicated that no borrower is to be indebted to a title lender for any great period of time,” the state regulations say.

But that’s exactly what happened to Ahmedin. Because Missouri regulators accept the lender’s classification of her loan as a small loan — not a title loan — she still owes Missouri Title, more than 27 months after first signing up.

Ahmedin’s records show she paid Missouri Title Loans at least $3,100 in interest. That’s more than Ahmedin said she originally paid for the car.

Her lawyer — Rob Swearingen, of the nonprofit Legal Services of Eastern Missouri — said that, had Ahmedin’s loan been subject to the principal-reduction requirement, it would have been paid off in one year’s time at a maximum cost of $2,606.

lenders ‘pick and choose’

Without offering her car title as security, it’s hard to imagine Ahmedin qualifying for a loan.

She doesn’t work, own her home or have any other collateral. After paying rent and utilities, she has about $200 — not enough to pay one month’s interest and stay current on other bills.

For both title loans and small loans, Missouri requires lenders to consider an applicant’s ability to repay.

Yet Missouri Title Loans boasts about how easy it is to qualify for loans. For instance, the company brags that it never performs credit checks. “Drive in today, and you’ll drive home with cash — it’s that simple,” says the company’s website.

Regulators require lenders to collect borrowers’ income information, but that’s about it.

“Risk assessment is up to the lender based on a number of qualifiers which they themselves must choose,” said Joe Crider of the Missouri Department of Insurance, Financial Institutions and Professional Registration.

Crider runs the department’s Consumer Credit Section, which regulates about 2,700 finance companies, including banks and payday, title and small-loan lenders. He said there was nothing unusual, or illegal, about a company’s marketing a loan as a title loan, taking a vehicle title as security and not being subject to the title-loan law.

“There’s four or five different (type of) loans that can be made on a car,” Crider said. “The lender can pick the license that it fits under.”

Crider said some companies only offer title loans, despite their more restrictive regulations, because the businesses can’t afford to maintain two licenses or because they specialize in loans less than $500, the minimum size of a small loan. He believes title loans — as classified by the state — generally are for between $300 and $500.

Missouri legislators legalized unlimited interest rates on small loans in the 1990s. Rates had been capped at 26.6 percent.

In 2001, just three years after Missouri established its title-loan law, then-Auditor Claire McCaskill issued a report criticizing it as ineffectual. The report said title-loan lenders “can pick and choose which statute serves them best without concern for consumer interests.”

While the audit was in the works, legislators were re-writing the title loan law to include new disclosure language and the principal-reduction requirement. Initially, the goal was to close the regulatory loophole, said David Klarich, a lobbyist who, at the time, was a state senator and a sponsor of the legislation.

In that regard, the bill was a failure. The strengthened safeguards didn’t mean much, because lenders still pick the regulatory regime they prefer.

COURT VS. ARBITRATION

Campbell, a class-action lawyer at downtown’s Simon Law Firm, says the state’s interpretation violates a basic legal principle: When something appears to be governed by conflicting laws, a newer and more specific statute trumps any older and more general provisions.

Just because a title-secured loan is large enough to qualify as a small loan doesn’t mean it stops being a title loan, he said.

“To believe that the Legislature went through all the effort of passing a title loan law just to regulate loans less than $500 â€Ķ It’s nonsense.”

Campbell’s clients had experiences similar to Ahmedin’s. One made two loan payments totaling about $1,147, but found that she had reduced the $2,215 principal by just six cents. The company enrolled another of Campbell’s clients in a small loan that required him to pay $794 in one month, about $70 more than the borrower’s monthly income from disability payments.

Lawyers such as Campbell and Swearingen think they would have a good shot at winning in court and forcing regulators to treat title-secured small loans as title loans. The problem, they say, is getting in front of a judge.

That’s because loan agreements require borrowers to seek relief through arbitration, not the courts. Even if an arbiter rules in the borrower’s favor, the ruling doesn’t have the same power as one made from the bench. It doesn’t develop case law.

The risk of losing in arbitration isn’t much of a threat to a high-volume lender such as Missouri Title Loans.

That’s because the loan agreements prohibit class arbitration. Like class-action suits in court, class arbitrations encourage lawyers to take small-dollar cases because clients can be bundled into large groups. That means lawyers representing consumers can put more resources into the case, and means they can expect a big pay-off if they win.

Without a lawyer, individuals may be reluctant to pay as much as $125 to start arbitration.

Campbell has filed a class-action suit against Missouri Title Loans, and he believes the company has illegally classified more than 10,000 title loans as small loans.

In 2008, St. Louis Circuit Court Judge David Dowd handed down a split ruling in that case. He said it can’t move forward in court, as Campbell had pushed for; but he also ordered that the loan agreement’s ban on class-action arbitration must be thrown out.

An appeals court upheld that ruling, and on May 19, Missouri Supreme Court judges heard arguments in the case.

Missouri Title Loans wants the court to allow only individual arbitration; Campbell wants the court to affirm the ruling in favor of class arbitration or to throw out arbitration entirely.

The court could hand down a ruling as early as Tuesday.

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Car Dealers ‘Yo-Yo’ Practice Irks Customers

St. Louis Post-Dispatch, November 06, 2011

Barbara Webster thought she had bought a new Sorento at Suntrup Kia in the Mehlville area in February. She traded in her old one, signed a credit agreement and drove away.

Now she has no car at all, although she says she made the payments. Suntrup not only took her new car back, but the dealer kept her down payment and didn’t return her trade-in.

“I’m very upset. They’ve taken my car,” she said, “plus my money.”

This is an example of “yo-yoing,” said Rob Swearingen, an attorney at Legal Services of Eastern Missouri, who is representing Webster. It’s a fairly common practice, especially in the used car business, he added.

The practice draws fire from consumer advocates, but dealers who spoke with the Post-Dispatch say criticism is unfair. They say they explain to customers that the deal isn’t final until the financing contract is sold, and customers sign a paper to that effect.

According to consumer advocates, here’s how yo-yoing works:

A consumer drives away having just bought a car and signed a loan agreement, thinking financing is in place. Then the dealer is unable to sell the loan to a finance company, so the dealer wants to renegotiate the deal with the customer or take the car back.

“They’ll want you to come in and they’ll either want to put you in a different car or a higher interest rate,” Swearingen said.

Dealers often refuse to return down payments, using the money as compensation for mileage the customer placed on the car.

The buyers are often people with inadequate income or poor credit who don’t qualify for a prime car loan. Webster, 66, a retiree, agreed to pay 18 percent annual interest to finance her $24,665 Sorento. Other contracts reviewed by the Post-Dispatch charged as much as 24.95 percent. Prime auto loans in February averaged about 4.8 percent, according to Bankrate.com.

Webster, who lives in north St. Louis, said she thought the deal was final when she drove away.

“I thought everything was OK and I had me a new car,” she said.

Her sales and financing contracts show that she put $2,500 down and traded in a 2007 Chevrolet Equinox. The dealer credited her with a trade-in allowance of $11,574, but she still owed $16,000 on the Equinox. So, the difference was added to the amount she borrowed to buy the Sorento.

She signed an installment loan agreement for $24,665 with Suntrup as the creditor. The contract said the dealership would transfer the loan to JPMorgan Chase Bank.

“After I had it about a month, they said I wasn’t financed, and I had to come up with a co-signer,” she said. Webster eventually found a relative willing to sign, and they drove to the dealership. But the relative balked when she saw the loan paperwork.

Then the dealer took possession of the car.

Webster said she asked for the return of her trade-in, but the dealer told her it had been sold. She asked for her down payment. “He said I don’t get that back,” she said.

In a written statement, Butch Suntrup, partner in the dealership, declined to comment, saying he was gathering information on Webster’s case and noting the possibility of litigation.

“I can tell you that we aggressively work to secure lending for each and every customer who desires to purchase a car from us; each individual’s circumstances vary and privacy laws prevent us from discussing any individual customer’s case,” he said.

The dealership said more in reply to Webster’s complaint to the Better Business Bureau. In that response, Suntrup says the bank discovered that Webster had lost her job. Webster says she retired after she bought the car.

The dealership also said it had auctioned off her trade-in.

“We lost on the sale of her car and so we kept the deposit as collateral to our loss and she would still legally owe us money,” the dealership said in the BBB report. “This should be an invalid complaint as we have done everything we could to work with her to get a car she could afford.”

Swearingen, whose agency provides free representation to the poor, says he has a pile of yo-yo cases. “I’m starting to see more and more of it,” he says.

The practice has drawn fire from consumer advocates across the nation.

“It’s been a huge problem all over the country,” says Rosemary Shahan, president of Consumers for Auto Reliability and Safety, an advocacy group in California. “You can have good credit and still get yo-yoed.”

Dale Irwin, a consumer lawyer in Kansas City, said the practice draws its name from comments made by a Kansas City area auto finance manager during a deposition in a consumer lawsuit.

“They view the car as on a yo-yo string and they can get it back,” Irwin said.

Swearingen says he thinks repossessions such as Webster’s aren’t legal under Missouri law. After all, she had a sales contract and a loan agreement with Suntrup as the creditor. The deal was final, he said.

But dealers often rely on another document signed during the closing process. That document, sometimes called a “bailment,” says that the sale is contingent on the dealer’s ability to sell the loan. If it can’t, the purchaser must return the car and pay a fee. Sometimes that is $30 a day. Sometimes it is 50 cents or a dollar for every mile driven.

In July, Stefan Gilliehan and his wife, Olivia McClinton, bought a 2009 Chrysler 300 from Auto Stop in Hazelwood. The St. Peters couple put $1,000 down and signed a loan agreement with Auto Stop, financing $19,911 at 20.95 percent annual interest.

“They said they could guarantee financing for us,” Gilliehan said.

In August, they got a letter from Regional Acceptance Corp. saying they had been denied credit, citing “temporary or irregular employment.” After buying the car, McClinton had lost her part-time job.

Then came the phone call; the dealer wanted the car back. The couple returned it, but didn’t get their down payment back. Worse, they got a letter from the Missouri Department of Revenue, claiming they owed sales taxes on a car they no longer had.

The couple didn’t get their down payment back because they had put 2,500 miles on the car, said Drew, who identified himself as the manager at Auto Stop but wouldn’t give his last name.

He said the couple was told that the deal was contingent on financial approval and that they would be charged for mileage. The buyers signed a paper to that effect, he said.

“We can’t really remember what we were signing,” Gilliehan said. “They kept us in there for probably five hours. It was long drawn out.”

That’s a common problem among buyers in yo-yo cases, Swearingen says. They don’t understand the dense legal documents they sign, often at the end of a long day at the dealership.

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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. https://www.stlbeacon.org/#!/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 www.house.mo.gov/billcentral.aspx.

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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