News Tribune

JCLifer 2 years, 2 months ago

Why would it not be a good time for Ameren to raise their rates? If their costs for buying, generating, and transporting electricity are higher, it makes perfectly good sense that they may need to raise their rates for their customers.

I think Missouri's public schools must be much worse than folks think. Why can't people understand simple business and economic principles around here?

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bluesfan13 2 years, 2 months ago

So businesses aren't supposed to profit?

Here's a clue to how economics works. If you're profiting, but not profiting at least as much as what you could make by investing your funds in something else, it's time to close up shop.

What did they profit in 2010? Something like $213 million? On an equity of $7.85 billion for the company, that's a rate of return of only 2.7%.

Basic economics say that Ameren should close up shop and invest their equity in municipal bonds, or anything that pays at least a 3% rate of return.

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Rison 2 years, 2 months ago

True, but if a small business owner makes a similar profit a couple of years in a row in a bad economy and goes to the bank asking for more money so they can expand, are they as likely to get as much of an increase (relatively, obviously) as Ameren is trying to get?

I'm not asking rhetorically btw, I would seriously like to know.

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bluesfan13 2 years, 2 months ago

Depends on what your definition of small business is, and how you're tracking profit. NO small business could stay afloat with a 2.7% rate of return, especially if owner's salary is part of the 2.7%. That means that you invested $100,000 in your buisness, but only earn $2,700 per year. You'd be stupid to do that. For example, Spectators is for sale. The listing agent claims a Rate of Return of 58%. And it's for sale. And no one has bought it yet. To restrict pricing by law to limit a coroporation to 2.7%, and then still limit them to not be able to recover cost of construction is insane from an economic standpoint.

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blueknight 2 years, 2 months ago

Making a net profit is fine. But when you are essentially a monopoly, excessive profits are just unacceptable.

I have stock in Wal-Mart and I earned less than 2.7% on my stock last year, but I dont see them closing up shop.

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Rison 2 years, 2 months ago

I'm with you on this one.

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bluesfan13 2 years, 2 months ago

Wal-Mart did not profit less than 2.7%... Wal-Mart is able to profit as much as their retail model will allow. They may retain earnings, charge higher prices, and "pre-profit" in anticipation of new store construction. Utility companies are limited by the State PSC in the rates that they can charge, and the profit that can be made. They are (by law) NOT allowed to charge enough in advance to build new power plants.

“The strength of our earnings performance for fiscal 2011 and Walmart’s strong financial position allow us to again increase our dividend payout to shareholders,” said Mike Duke, Wal-Mart Stores, Inc. president and chief executive officer. “We continue to generate ample free cash flow to fund store growth across all our markets, make strategic acquisitions and deliver returns to shareholders through dividends and share repurchase. In fact, for fiscal 2011, we returned a record $19.2 billion to shareholders through dividends and share repurchase"

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