AmerenUE, consumer groups differ on rate increase proposals

Thursday, November 20, 2008 | 7:12 p.m. CST; updated 10:37 a.m. CST, Wednesday, February 18, 2009

COLUMBIA — Opening arguments were heard Thursday in the $202 million rate increase case of the public utility company AmerenUE and other parties who argue the Missouri Public Service Commission should pass a smaller increase.

“We hotly dispute that they need a $202 million increase,” said Kevin Thompson, general counsel of the commission's staff advisory group.

The staff is requesting that AmerenUE customer rates increase by $68 million. Lewis Mills, the public counsel in Missouri, also said the utility was asking for too much in its rate request. Mills serves in an appointed consumer advocacy position.

AmerenUE has asked the commission, which sets the utility company’s electricity rates, to raise customers’ rates in order to pay for climbing costs, said AmerenUE's attorney, James Lowery.

Among those costs, Lowery cited:

  • employee wages,
  • construction materials,
  • power plant fuel
  • and capital expenditures.

AmerenUE’s rate case is only its second in the past 20 years. In 2007, the utility company asked for $361 million, but the commission awarded a rate increase of $43 million.

According to AmerenUE testimony submitted to the commission, the utility company’s electric rates are 40 percent below the national average.

AmerenUE services electricity to 1.2 million households in Missouri and 3,700 in Boone County.

Because of inflation, the utility expects greater costs in the future and would like to increase its annual profit margin to 10.9 percent. The commission has capped the utility company’s annual profit margin at 10.2 percent.

In addition, AmerenUE said it wants to set a fuel adjustment clause, which would allow the utility company to adjust customers’ bills as prices of power plant fuel fluctuate.

In its current practice, when the price of power plant fuel changes, the utility company has to wait for approval from the commission before it can adjust customers’ bills.

Thompson thinks AmerenUE has not demonstrated how a fuel adjustment clause would help customers save money. He said it wouldn’t be fair to families having a hard time in the current economy to then face an increase in electricity costs.

The general counsel also said AmerenUE’s annual profit margin should be reduced to 9.5 percent. He said the utility company wants to increase its profit only so it can receive better credit ratings.

“You must not give this company one penny more” than it needs, Thompson said.

Mills questioned Thomas Voss, chief executive officer of AmerenUE, about the legality of some of the money within the rate request. Mills was referring to $46 million the utility company used for costs related to the application procedure with the U.S. Nuclear Regulatory Agency for a second nuclear reactor at its Callaway County site.

Mills said it would be illegal to charge for the application expense because Missouri law prevents public utilities from increasing customers’ rates for any construction work before it begins providing a service.

Voss said the utility company hasn’t decided whether it will build a second reactor, but, he said, the application process is necessary in case the company decides to build the reactor, which could be decided upon within two years. If that happens, the reactor could be online between 2018 and 2020.

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