The Missouri Public Service Commission has determined that Union Electric Company (Ameren Missouri) should receive a rate increase to reflect the company’s increased costs of providing service to its customers. The commission’s decision cuts Ameren Missouri’s July 3, 2014, original rate request by more than half.
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The PSC Staff estimates the impact of the rate increase on a typical residential customer of Ameren Missouri will be approximately $5.45 a month.
As part of this rate case, the Public Service Commission approved an agreement which exempts qualifying low-income customers from having to pay the monthly Energy Efficiency Investment Charge (EEIC) that appears on monthly customer bills. A typical residential customer currently pays an EEIC of approximately $6 a month.
According to information filed by the PSC Staff, the commission’s order grants a rate increase of approximately $121.5 million — approximately $142 million less than what the company requested in its July 2014 filing. The commission’s decision authorized a return on equity (ROE) of 9.53 (Ameren Missouri’s current ROE is 9.8%) and there will be no increase in the fixed charge on customer bills.
When Ameren Missouri filed its rate request with the Public Service Commission on July 3, 2014, it sought to increase annual electric revenues by approximately $264 million; an ROE of 10.4% and an increase in fixed charges on residential customers’ monthly bills from $8 to $8.77.
In its July 2014 filing, Ameren Missouri stated the rate increase request was driven by several factors, including continued investment in the company’s generation and energy delivery systems, including large investments in environmental controls at the Company’s Labadie Energy Center and a new reactor vessel head at the Ameren Missouri Callaway Energy Center.
Ameren Missouri stated other drivers included escalating net energy costs, the recovery of solar power investments and customer rebates.
A majority of the rate increase reflects increased net fuel costs and would otherwise be recovered by the company through its Fuel Adjustment Clause (FAC). Ameren Missouri has had an FAC since 2009.
Under the rate case decision, the commission granted a special load retention rate for Noranda Aluminum, Inc., Ameren Missouri’s largest customer. The lower rate is intended to make it more likely that Noranda stays on the system and makes a contribution to Ameren Missouri’s fixed costs. Other customers, the commission said, will pay less on their own rates if Noranda stays on the system at a lower rate than if the aluminum smelter closed and the fixed costs Noranda currently pays were reapportioned to other Ameren Missouri ratepayers.
“It is important to understand that a customer in St. Louis who has no connection to the Bootheel, will pay higher electric rates if Noranda closes its smelter,” said the Commission. “Right now, Noranda pays a large portion of Ameren Missouri’s fixed costs, costs that will not go away just because Noranda no longer buys electricity. If Noranda closes its smelter, those costs will still be there, but then all Ameren Missouri’s other customers will have to pick up the bill for those fixed costs. Thus, Ameren Missouri’s other customers will benefit from retaining Noranda’s load for Ameren Missouri.”
The Commission’s vote was 4 -1. Chairman Robert Kenney and Commissioners William Kenney, Daniel Hall and Scott Rupp voted yes, Commissioner Stephen Stoll dissented.
Ameren Missouri provides electric service to approximately 1.2 million customers in Missouri.