UPDATE: AmerenUE gets rate increase

Tuesday, January 27, 2009 | 8:38 p.m. CST; updated 11:04 a.m. CST, Wednesday, February 3, 2010

JEFFERSON CITY — AmerenUE got part of what it wanted.

The Public Service Commission voted 3-2 Tuesday to increase electric rates for Ameren consumers but did not allow an increase for costs related to the construction of an additional nuclear power plant.

The estimated increase for a residential consumer is approximately $5.88, or 8.1 percent, according to a news release from the commission.  The profit margin increased from 10.2 to 10.76 percent.  The increase in rates will bring in an additional $162.6 million in revenue.

But the Public Service Commission did not approve all of the company's rate increases. The commission voted against passing construction costs of Callaway 2 – the proposed second nuclear power plant in Callaway county – down to consumers.

"I think there was an unanimous agreement that the costs associated with Callaway 2 violate what's called the anti-CWIP law or the anti-construction work in progress law that was passed by proposition one and by the voters some 30 years ago, that those expenses associated with the plant that has not yet been built cannot be passed through to rate payers," said Robert Clayton, the chairman of the commission.

Ameren requested its rates be increased to help pay for overall rising costs as well as certain Callaway 2 construction and operating license application costs.

While the inclusion of the related costs was denied by the commission, Ameren maintains that the costs are a part of its efforts to ensure future reliability.  The natural gas and power provider has increased its budget for tree trimming and has put more wires underground to minimize blackouts.

"We felt that those costs were appropriate because they're aimed at ensuring reliable service for our customers in the future," Ameren spokesman Mike Cleary said.

Commissioner Jeff Davis, who voted in favor of the increase, said he was worried because he thought the commission was not focusing on the bigger picture.

"My concern is that the people who voted against this order were not basing their decision on the facts. They were basing their decision on what they thought would be acceptable to the public," Davis said. 

Citing previous spending habits of Ameren, the commission voted in favor of including a fuel adjustment clause. Cleary said the clause would allow the company to decrease or increaseits prices based on the volatile nature of the fuel industry.

Clayton, who voted against the Ameren order because he said the profit margin was too high, also opposed the inclusion of a fuel adjustment clause. 

"I also disagreed with the fuel adjustment clause that was set up, and that basically enables Ameren to pass through 95 percent of their fuel expenses (to their consumers)," he said. "And I didn't believe that was appropriate in the current economic climate, and also believe there should be a better balancing of risks among the rate payers and with the company."

The majority opinion, however,  did vote to include the clause,  so that Ameren could recover the cost of fuel and continue to spend responsibly.

"Everyone in this case agrees that Ameren's fuel purchasing practices are prudent," Davis said. "No one has ever contested that one piece of coal or one BTU of gas that Ameren has purchased has not been prudent.  So everything they have been doing is prudent, and the question is are they entitled to recover all of those costs....  What this commission said, what the majority said was let them recover 95 percent of those costs to give them some incentive to manage (their fuel expenses appropriately)."




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