Low summer demand may increase electric bills

Thursday, October 8, 2009 | 11:49 p.m. CDT; updated 11:59 p.m. CDT, Thursday, October 8, 2009

JEFFERSON CITY — Many Missourians who saved money on their electric bill this summer due to mild weather could end up paying more in the future if the state's biggest electric utility gets its way.

AmerenUE is reporting a decline in electric demand. The company said it has not calculated the precise decline.

This lower electric demand is one of the factors AmerenUE has cited for its request to the Missouri Public Service Commission for a temporary rate increase.

Increasing debt from various improvement projects coupled with lower demand has put AmerenUE in a place where an interim rate increase is necessary, AmerenUE spokesperson Mike Cleary said Wednesday.

Before the state's utility-regulating Public Service Commission is a request to allow a 1.7 percent interim rate increase. The increase would become effective before the commission makes a decision on a general rate increase of 18 percent that had been filed by AmerenUE in July.

On Wednesday, Public Service Commission members delayed a hearing on the interim increase until Dec. 7.

A decision on AmerenUE's larger, general rate increase request will be made some time in March, commission spokesman Kevin Kelly said.

Wess Henderson, the commission's executive director, said interim rate increases were previously only granted on an emergency basis. 

"The burden of proof that this is an emergency is on Ameren," Henderson said.

Lewis Mills, public counsel for the state, said he opposes the interim increase. Mills' office represents customers in utility cases.

The committee's previous standard to consider increases only in an emergency was necessary so utilities do not go bankrupt, Mills said. AmerenUE is not even close to bankruptcy; the company is just not making enough profit, he added.

The committee's decision to consider the interim rate increase is a surprise, Mills said, adding that last week it looked as if the commission would reject the increase outright.

According to Cleary, AmerenUE undertook a number of projects this year to increase reliability, including moving transmission lines underground and increasing inspection efforts. Borrowing money in order to fund these projects, AmerenUE now finds itself taking a longer time than expected to pay back these loans due to decreased revenues from lower customer demand this summer.  The higher borrowing costs has lowered AmerenUE's credit rating, Cleary said.

Stock prices of Ameren Corporation, the publicly traded company that includes AmerenUE, are down almost 30 percent from their 52-week high. 

Citing U.S. Security and Exchange Commission rules, Ameren representatives declined comment on whether a lower credit rating is affecting stock prices.

By comparison, stock prices of two of Missouri's other large electric companies — Empire District Electric and Kansas City Power and Light (a subsidiary of Great Plains Energy) — are both down about 10 percent over the same period. Both companies also declined comment, citing SEC rules.

A 16.1 percent rate increase took effect for Kansas City Power and Light customers in September, Kelly said.

According to spokeswoman Julie Mau, Empire has not requested a rate increase.

The energy rate increase in Columbia that took effect Oct. 1 is separate from AmerenUE's requested increase, said Connie Kacprowicz, a spokesperson for Columbia Water and Light. Columbia's increase is due to increased power supply costs, Kacprowicz said.

Columbia Water and Light receives a portion of its energy from Ameren Energy in Illinois, a separate entity from AmerenUE.

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