By Johnny Kampis | Missouri Watchdog
ST. LOUIS — Customers of Ameren Missouri will be paying $120 a year more for electricity, and higher rates are on the horizon.
The Missouri Public Service Commission earlier this week OK’d Ameren’s rate increase that will hike residential bills an average of $10 a month.
But the PSC has yet to act on a proposal to create a separate rate class for low-income power customers, which could cause bills to increase even more for those not in that lower rate class.
The PSC announced the rate hike Wednesday in a press release in which the total increase ($260 million) was listed in the sixth paragraph and the average effect on customers was noted in the ninth.
Ameren had asked for a $376 million, 15-percent increase. The company said it needed the extra revenue for infrastructure improvements and to pay for energy efficiency programs required by the state when it passed the Missouri Energy Efficiency Investment Act in 2009.
The company got a 7 percent rate hike last year. This was the fifth increase approved by PSC for Ameren in the past six years.
Robert Kenney was the lone dissenting vote among the four PSC commissioners. He argued that Ameren’s maximum return on equity, which was reduced from 10.2 percent to 9.8 percent in Wednesday’s ruling, should have been cut even further.
Lewis Mills Jr., head of the Missouri Office of the Public Counsel, which represents the interests of the state’s utility customers, said at a public hearing in St. Charles in August that he’d like the utility’s profit margin to be closer to 8 percent.
He said after the ruling that the amount “shouldn’t have been anywhere near this high.”
The controversy over the latest rate hike, which drew plenty of angry crowds during a series of public meetings across the state this summer, prompted the PSC to consider the idea of reducing rates for its more economically challenged customers.
Kenney said that could cause rates for other residents to climb even more.
“There’s always the possibility for a cross subsidization, but we try to minimize those,” he said. “We want to look at how we can help lower the rate for low-income customers without burdening those with higher income rates.”
He said he’s hopeful that a lower rate class would mean more residents would pay their bills, which would lower the utility’s overall debt that is generally passed on to customers.
The PSC’s docket sheet on the issue has drawn plenty of comments from energy advocates and groups that serve the impoverished.
The AARP said that aside from the issue of a separate rate class, the PSC could first ensure that power rates are “just and reasonable, and utilities earn no more than a fair rate of return on equity.”
“Ensuring that rate increases are no higher than absolutely required by law helps low-income customers address the affordability of their utility bills,” the organization wrote.
Diana M. Vuylsteke wrote on behalf of Missouri Industrial Energy Consumers that utilities would be required to track a large amount of personal income information to ensure that customers who don’t qualify don’t participate.
“Utilities are not suited or equipped to conduct these activities,” she wrote.
Vuylsteke and others have questioned whether the PSC has the legal authority to create another rate class, and suggested the issue instead should be addressed by the Legislature.
Rep. Darrel Pollock, R-Lebanon, the chairman of the House Utilities Committee, said there are programs in place to help low-income residents like the Low Income Home Energy Assistance Program through the Missouri Department of Social Services.
He said he doesn’t think the PSC should consider setting a new rate class.
“My personal opinion is that I know that utility bills are expensive. They’re expensive for everyone,” Pollock said. ”All hard working people have to pay them.”
The rate hike should take effect Jan. 2. The $10 per month average increase is based on usage of 1,100 kilowatt hours per month.
PSC spokesman Kevin Kelly said he’s not aware of a timetable for deciding on the rate class issue.
By Johnny Kampis | Missouri Watchdog