Utility Asks for 15% Rate Hike; Efficiency Spend to Double

by | Feb 6, 2012

Utility Ameren Missouri is planning a 14.6 percent rate hike next year to reimburse investments in renewable energy, efficiency and reliability.

The subsidiary of Ameren Corporation filed an electric rate increase request with the Missouri Public Service Commission, saying the $376 million increase is needed to cover investments as well as operating costs.

The company says it needs reimbursement for over $700 million in investments that are not currently covered by electric rates. These will be recovered from customers over the service life of the investments, Ameren says.

Last month the company proposed efficiency programs costing $145 million over three years, an initiative it said would save customers 800 million kWh a year. The move came less than a year after Ameren said it would cut efficiency investments from $25 million to $20 million, saying its hand was forced because shareholders foot the upfront cost.

But the efficiency program proposed last month would more than double what Ameren Missouri had been spending on efficiency before the cuts, according to the St. Louis Post-Dispatch. Ameren said the proposed program will provide about $500 million in total customer benefits over the next 20 years.

The company says its average electric rates are about 25 percent below the national average and the lowest of any investor-owned utility in Missouri.

Key components of the company’s rate increase request are:

  • Energy efficiency: comprises about $81 million (about 22 percent) of the request.
  • Investments made primarily to improve reliability and comply with environmental and renewable energy regulations: comprise about $85 million (about 23 percent). These include costs associated with the Ameren Missouri Maryland Heights Renewable Energy Center, a landfill gas facility expected to meet the energy needs of about 10,000 homes. The company says that since 2006, its infrastructure investments have reduced outage frequency by 27 percent, reduced sulfur dioxide emissions by 27 percent, and improved power plant performance.
  • Higher net fuel costs for power plants: account for about $103 million (27 percent). The price of fuel, such as low-sulfur coal is rising, the company says, as are costs for transporting coal to Ameren’s facilities.

Ameren is also seeking to recover costs from several major storms that are not fully reflected in rates, it says, including the tornado that swept through St. Louis in April 2011.

The utility’s request will be reviewed by the MPSC and other parties, with a decision expected by December.

Ameren Missouri serves 1.2 million electric and 126,000 natural gas customers in central and eastern Missouri. It says that it has reduced its combined non-fuel related operating and capital expenditures every year since 2008, with 2011 expenditures reduced more than $300 million from 2008 levels. In late 2011 it cut staffing levels by about 340 employees.

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