Consumers Council of Missouri
ST. LOUIS, Mo., July 1, 2015. The rate increase Ameren Missouri won in its most recent rate case showed up on your electric bill last month.
From 2007 through 2014, Ameren Missouri received increases of more than 43 percent in the rates that it charges residential consumers. And that doesn’t count increases in its fuel surcharge, which adds significantly to the company’s bottom line. During most of that period, when the bulk of Ameren’s customers were suffering from a lagging economy, the Public Service Commission authorized the company to make a profit of about 10 percent, plus the surcharge, which passed- through millions in fuel expenses to customers — making it a very healthy company indeed.
In fact, records, revealed because of Consumers Council’s legal actions, show that for nearly two years the company’s actual profit far exceeded the amount authorized by the PSC. And we made that point during the rate case, when the company was asking for even more money from its customers.
Nevertheless, although any rate increase is a burden for most households, we feel fortunate consumers fared as well as we did, with only a 5 percent increase resulting from this most recent rate case. If not for our efforts, the outcome could have been much worse. We achieved some significant victories in other areas of the rate case that will help keep electric rates fairer into the future.
News reports on the case were mixed and confusing. So we’d like to explain our perspective and why we believe consumers made some important gains:
• Ameren asked for a 9.65 percent rate increase of $264 million. But after the audit in the case and our advocacy efforts, Ameren was allowed an increase of only $121 million, with residential customers rates going up about 5 percent, — an increase of $5-$7 a month for the average customer.
• The corporate profit allowed was reduced to 9.53 percent from 9.8 percent. This will save customers tens of millions of dollars a year.
• Several rate-tracking mechanisms were eliminated, and several cost efficiency incentives were restored. This will increase transparency and allow consumer advocates to challenge future cost increases instead of their being automatically applied.
• The fuel adjustment surcharge was reauthorized, but the company is no longer allowed to slip unrelated transmission costs into it.
• The monthly customer charge remains at $8 for residential customers. The trend across the country has been for utilities to increase this fixed charge by huge percentages. Holding the line on fixed charges (and thus applying increases to usage fees) helps low usage customers, many of whom are low-income, seniors and folks who strive hard to keep their monthly bills under control through conservation and efficiency.
• The PSC gave Ameren’s largest customer, Noranda Aluminum, a special rate for three years, along with several consumer protections we recommended. This provision was controversial and one that CCM worked on very hard. The impact on all other residential and business customers is a less than 0.5 percent shift. Noranda had requested more than double that shift. The result is less than what the evidence proved would have been the impact if the aluminum smelter went out of business or if it had gotten a special wholesale contract as proposed by Ameren. The PSC decision includes several consumer protections advocated by Consumers Council that will help ensure that neither Ameren nor Noranda receives a windfall from the arrangement.
Consumers Council of Missouri works in coalition with the Fair Energy Rate Action Fund, which is made up of groups representing residential customers – AARP and Empower Missouri, in addition to CCM; Missouri Association of Retailers, representing businesses of all sizes; and several large corporations – Ford Motor Company, Noranda Aluminum and Cargill. We support each other in our efforts to make Missouri’s utility rates fair and affordable for all consumers.
We appreciate the healthy discussion of the issues as expressed in the Post-Dispatch’s editorial, which concluded with an understanding of realpolitik in Missouri that we confront daily.