Ameren Requests 11 Percent Electric Rate Hike

About 200 people – mostly senior citizens – lodged complaints and gathered information on Ameren Missouri’s proposed 11 percent electric rate hike Tuesday.  The rate hike projects a $263 million increase for Ameren.

“It’s on the backs of the working class, the poor people,” said Saundra Austin, an attendee. “We need a break.”

Austin said she lives in subsidized housing, which takes one-third of her fixed income.

“I had to lower my thermostat to 62 degrees this winter,” she said.

The Missouri Public Service Commission (PSC) hosted a public hearing at  to gather testimony from ratepayers and answer questions. It was one of a series of meetings being held statewide. The PSC, Missouri’s utility regulatory commission, will decide in August whether to allow the rate increase requested by Ameren.

Ameren Missouri CEO Warner Baxter said that the rate increase is necessary because the electric utility has incurred several expenses to ensure a reliable, safe and clean energy supply

He pointed out that Ameren installed a $600-million scrubber in its Sioux Power Plant near West Alton.  The scrubber helps clean air emissions from the coal-fired plant.

 “It’s important for clean air in the state of Missouri, but it also will help us meet federal clean air requirements,” Baxter said.

The scrubber accounts for $110 million of the $263 million request.

About $66 million of the request came from increased costs for fuel and transportation. PSC Public Information Officer Greg Ochoa said the state Legislature in 2005 approved a law that allows Ameren to receive fuel cost increases. The way the law is written, the PSC has little say regarding fuel cost increases, he said.

Baxter said when fuel rates decrease, Ameren is obligated to decrease its rates, but acknowledged those decreases have been small.

Several seniors noted social security payments have increased in two years and will not increase this year. Any utility bill increase will severely strain budgets, they said.

According to a PSC handout, the increase would add $9.30 to the average residential electric bill.

Ameren received a 10 percent rate increase that went into effect last June. In July, Ameren requested and received a $71 million increase to offset rising fuel costs.

The Fair Energy Rate Action Funds, a Missouri-based consumer and employer group, passed out literature stating that Ameren has been awarded more than $577 million since March 2009, a 26 percent increase.

After the meeting, Senior Vice President of Customer Relations Richard Marks said that many customers don’t realize they pay just 11 percent more per kilowatt-hour for electricity than they did in 1991.

“It was 7.8 cents then and now it’s 7.9 cents per kilowatt-hour,” Marks said. “We had a series of rate decreases from 1991 through 1996,” Marks said. “In 2006, we had our first rate increase in over 20 years. That’s why our rates are still 35 percent below the national average.”

Steve Rackers, an auditor with PSC staff, said the staff is recommending a $72 million increase for Ameren.

“The largest difference is the rate of return (profits for Ameren),” Rackers said. “Staff is recommending a an 8.75 percent return; Ameren is recommending a 9.6 percent return.”

Steve Teson, another attendee, said it’s not just seniors who will have a tough time with the electric rate increase.

“It’s tough to swallow,” Teson  told Ameren and PSC officials. “Last year we got a 10 percent increase and now an 11 percent increase on top of that. We’re not getting raises. How do you expect us to pay that type of increase?”

Baxter said the Ameren focuses on keeping costs down while making energy supply more reliable, such as burying electric lines when feasible.

He said Ameren contributed $5 million from its own profits to the Dollar More program, the utility’s effort at aiding its low-income customers.

Public Counsel Lewis Mills said he disagrees improvements to the Taum Sauk dam site and costs associated with rate increase requests. As public counsel, Mills advises the PSC on behalf of ratepayers.

 “Why should you pay for improvements like adding a spillway when there should have been a spillway there in the first place?” Mills said. “There’s no way they would have been allowed to rebuild the dam without a spillway.”

The Taum Sauk dam had a catastrophic failure in 2005, and Ameren had to foot the cost for repairs. While it cannot request a fee hike for replacing the dam, Ameren did include costs for improvements to the dam. The Taum Sauk improvements account for $15 million of Ameren’s request.

Mills said rate increase requests cost account for just about $2 million to $4 million. However, he doesn’t believe ratepayers should foot the bill to hire attorneys and consultants who help raise the rates in the first place, Mills said.

“It’s not the biggest cost, but it’s the most objectionable,” he said.