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Missouri regulators approve Empire District rate hike

Missouri regulators approve Empire District rate hike

June 2nd, 2011 by DAVID A. LIEB, Associated Press in News

JEFFERSON CITY, Mo. (AP) - Little more than a week after a deadly tornado hit Joplin, Missouri utility regulators on Wednesday approved an $18.7 million rate increase for the electric company that serves the area.

The 4.7 percent rate increase granted to The Empire District Electric Co. was not related to the tornado damage, but was the result of a rate case that began last September. It largely reflects the cost of a new coal-fired power plant north of Kansas City in which Empire District has a 12 percent ownership stake.

"It absolutely is a horrible time in order to do this," acknowledged Kevin Gunn, chairman of the Missouri Public Service Commission which unanimously approved the rate hike. But he added, "The Public Service Commission felt compelled to do this" because representatives for the utility and consumers agreed to the rate increase and Joplin officials did not object.

The agreement calls for the rate increase to take effect as early as June 15. It will cost an additional $3.52 monthly for a residential customer who uses 1,000 kilowatt hours of electricity. Empire District originally sought a $36.5 million rate increase, which would have added $13.60 to the monthly bill of that typical residential customer.

Public Counsel Lewis Mills, who represents the interests of residential utility customers in state regulatory cases, said the agreement approved Wednesday was "a reasonable rate increase" that was the product of negotiations.

Empire District President-Elect Brad Beecher said in a written statement that "we fully realize the unfortunate timing of this announcement in light of the terrible devastation in Joplin from the tornado just a little over a week ago." But he added that the rate increase was intended to cover expenses from utility construction projects that began in 2005.

The May 22 tornado that hit Joplin was the nation's single deadliest twister in decades and destroyed about 8,000 buildings. Empire District has estimated that it caused $20 million to $30 million of damage to its infrastructure, wiping out 10-to-15 percent of its customers' electricity usage. Some of the infrastructure, such as a power substation that was destroyed, will be covered by insurance, said Empire District spokeswoman Amy Bass. But most of the power lines that run to homes and business will not be covered by insurance, she said.

Because of the tornado, the company already has suspended paying shareholder dividends for the remainder of the year. Empire District said it is exploring various ways of recovering costs from the tornado, including another potential rate increase in the future.

Gunn and Mills both said Wednesday that they expect Empire District will seek state approval to pass along some of its tornado-recovery costs to customers.