Attack begins on Ameren 'overearnings'

Greg Meyer spent 29 years as a Missouri Public Service Commission staff member, “had a weekend of retirement” and then began working as a consultant for Chesterfield-based Brubaker and Associates.

Meyer’s work — and pre-hearing testimony for Noranda Aluminum’s complaint that Ameren Missouri has been taking in too much money — were the focus of Monday’s PSC hearing into that complaint.

Using reports that Ameren is required to file with the commission every three months, Meyer testified the company took in more each year than the PSC allowed Ameren to earn when, in December 2012, it set a 9.8 percent “return on equity,” or ROE, in Ameren’s most recent rate case.

“The history of your company is, you’ve had prolonged overearnings,” Meyer told Ameren’s lawyers Monday afternoon. “Based on my experience, I believe you’re overearning today.”

Meyer told Commissioner Bill Kenney the extra income hurts the ratepayers, and is “flowing through to the benefit of the company at this point.”

Meyer also testified that Ameren has “been overearning since June 2012 — and someone said enough’s enough.”

Noranda and 37 individual

customers filed the overearnings complaint last February.

Noranda’s lawyer, Edward F. Downey of Jefferson City, told the commissioners “the average is about $50 million per 12-month period” for Ameren’s overearnings.

But, he said, “The high was in March 2013 — the authorized return was 9.8 percent, but the actual return on equity was 12.28 percent. In dollars, that meant for that 12-month period, Ameren overearned by $138.22 million.”

Ameren’s lead attorney, Thomas M. Byrne of St. Louis, said Noranda and the complaining citizens must show the commission why their argument for forcing Ameren to reduce its rates is the right argument — and that they were using the wrong standards.

“The evidence in this case will show that complainants have not come remotely close to meeting this burden,” Byrne said. “Indeed, complainants do not even allege that continuing Ameren’s current rates — after the date this case would be concluded — would be unjust and unreasonable.

“To the contrary, all the complainants allege is that, during a past period, Ameren Missouri’s book earnings, with a few adjustments, were higher than the last return on equity authorized by the commission.”

The company argued that monthly reports show the company’s earnings fluctuate from month to month.

And, Byrne argued, Noranda and the individual ratepayers didn’t do a full-blown rate analysis to back up their argument — which means the commission hasn’t been given “all the relevant factors” that court rulings have said it must consider in setting, or changing, a utility’s rates.

Kevin Thompson, the PSC staff’s lawyer, told commissioners that the staff agrees with Ameren that the case should have had a full-blown rate study — which generally takes five or six months.

“Would you be surprised that the accountants think that anything less than what they do is not adequate?” Thompson asked. “I suggest that all the relevant factors are whatever you decide they are in a case — later you’ll find out if the court of appeals agrees with you.”

Meyer and others noted state law allows customers to complain about a regulated utility’s overearnings — and that their complaint doesn’t have to have the full-blown, time-consuming analysis required in cases where a utility is trying to raise its rates.

“The longer the overearnings exist, the more ratepayers are paying unjustified rates,” Meyer said. “We believe we’ve provided a calculation that will support a rate-reduction.”

The commission resumes its hearings this morning.

Originally scheduled to go all week, several of the attorneys think the evidence presentation may be finished tonight or Wednesday.

The five-member commission plans to decide the case by the end of September.


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