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Surcharge battle likely to continue

Surcharge battle likely to continue

March 25th, 2013 in News

As lawmakers return to Jefferson City this week, with just eight weeks to finish the state budget and all the other business they can accomplish, opponents of bills to allow electric rate surcharges hope two recent events involving Ameren Missouri torpedo the proposals.

The St. Louis-based electricity provider on Friday asked the Public Service Commission for authority to increase rates by $51 million, under a 2005 law allowing utilities to adjust their rates three times a year to account for fuel price changes - the fuel adjustment charge, or FAC.

But the Fair Energy Rate Action Fund, or FERAF, on Saturday complained that "Ameren is using legislation passed in 2005 to go outside the traditional ratemaking process to charge consumers."

Chris Roepe, FERAF's executive director, added the FAC request seeks to "take an additional $51 million out of ratepayers' pockets on the heels of five enormous rate increases" in the last few years.

In December, the PSC approved a $263 million electric rate increase for Ameren - a little over two-thirds of the company's $375.6 million increase request the company filed with the PSC in February 2012.

But FERAF also counts on a filing Ameren made with the federal Securities and Exchange Commission (SEC) this year, showing the company - in FERAF's words - "profited around $70 million more from electric customers than regulators authorized" for 2012.

Missouri law requires the PSC to approve rates that allow the regulated utilities a "reasonable rate of return," so rate case decisions include a "return on equity" percentage that serves as a ceiling on what utilities can earn.

Commission officials for years have noted the ROE is a target, but not a guarantee.

FERAF says Ameren violated the ROE for 2012.

PSC spokesman Kevin Kelly said last week no one has filed a formal complaint about that reported overage.

Warren Wood, Ameren Missouri's vice president of legislative and regulatory affairs, said several factors caused the 2012 earnings picture - including last summer's record heat that led customers to use more air conditioning; a one-time legal settlement that added some income; a change in accounting procedures; and the every-18-month refueling at the Callaway Power Plant didn't happen last year.

The refueling shuts the plant down for about two months while the fuel rods are changed and a number of maintenance projects are done, costing the company money without the income usually associated with the plant's electric production.

Scott Charton, spokesman for the utilities' Missouri Electric Alliance, noted that, "If the unusual factors were removed from the equation, Ameren Missouri's adjusted Return On Equity (ROE) would have been about 9.5 percent - below the 10.2 percent authorized for 2012 by the Missouri Public Service Commission.

"And, if you remove those unusual factors, the year 2012 would have been in line with other recent years when Ameren Missouri did not receive its authorized ROE."

With no official PSC complaint about the reported over-earnings, the commission could review the earnings as a part of the company's next formal rate case.

In Saturday's statement, Roepe tied the earnings report and the FAC request together as a way to object to the surcharge bills.

"That should be reason enough that lawmakers should oppose Ameren's proposed legislation to authorize an even more expensive surcharge to Missourians' electric bills," Roepe said.

"Our economy will suffer if utilities like Ameren continue to have a blank check to raise our utility bills."

The surcharge bills would allow the state's three regulated electric companies to do infrastructure repairs and add the costs of that work to customers' bills, even before the PSC has a full-blown rate hearing on the increases.

The proposals are sponsored by state Sen. Mike Kehoe, R-Jefferson City, and Rep. Jeanie Riddle, R-Mokane.