Fighting Ameren's rate-hike requestJan. 25, 2010 —The Ameren utilities, which provide electric and natural gas service for most of the southern two-thirds of Illinois, have requested a $130 million delivery rate hike before the Illinois Commerce Commission (ICC).
The proposed increase was filed in June of 2009, less than a year after the ICC had granted the company a $162 million rate hike. The Ameren utilities originally requested a $226 million increase, but as the case has proceeded the company has reduced its request to $130 million.
The rate hikes would affect a bill's delivery charges, which are the fees the companies charge to deliver gas and electricity to your home, plus a profit. The delivery portion of your bill consists of the fixed monthly customer charge and a per-therm or a per kilowatt-hour distribution charge. They take up about one-third of your bill. The charge for the actual gas/electricity you use takes up the other two-thirds of the bill.
What CUB Says
Testimony filed by CUB and the Attorney General's office argues that Ameren does not deserve a $130 million rate hike and, in fact, owes customers an overall $6 million rate cut. These findings are supported by a another piece of testimony, an "econometric study" on Ameren's performance that CUB released in September of 2009. That study found evidence that Ameren's electric utilities were among the most wasteful in the country.
In testimony supporting the $6 million cut, consumer advocates argued, among other things, that Ameren is seeking an exorbitant return on equity—or profit rate for shareholders, a key factor in determining customer rates. CUB argued that Ameren should get a 7.97 percent to 8.76 percent return, not the 10.8 percent to 11.7 percent it wanted. An ICC judge recommended 9.54 percent to 10.46 percent.
In late September, CUB filed as testimony an "econometric study" showing evidence that Ameren's electric utilities were some of the most inefficient in the country. The study, by utility economics expert Steve Fenrick, found that as Ameren fought for its $162 million rate hike in 2008, its electric utilities spent $158.5 million beyond what even an average utility would be expected to spend. That put Ameren in the poorest-performing, bottom-third of the study’s 115 utilities.
In other news: While speaking at a conference at a luxury resort in Hollywood, Florida in November, Ameren CEO Thomas Voss said his company's rate-hike request had received a "very, very mild response." He didn't acknowledge that in Decatur the night before speaker after speaker denounced Ameren's proposal at a public meeting attended by about 150 people.
In February, the company released its 2009 earnings report. Profits for Ameren’s electric and natural gas utilities more than doubled last year, from $51 million to $127 million, according to The Decatur Herald & Review. "Ameren pleads poverty on Main Street but, to Wall Street, it tells the truth, which is...it is doing very well," CUB Executive Director David Kolata said.
An ICC judge in February recommended that the company get no more than $56 million. CUB called the recommendation a step in the right direction but not nearly enough. A final decision by the full ICC is expected in April.
Help CUB fight the rate hike by filing an online comment with state regulators. (The comment can be as simple as “No Ameren increase.” Just pick an Ameren case, 09-0306 to 09-0311, and click “comment.”) Or you can call the ICC at 1-800-524-0795. You also can find this information at our Stop Ameren page.
Also, please give to CUB's consumer-defense fund to help us fight rate hikes.
-Ameren received a $162 million rate hike in 2008, the same year it made a profit of $622 million. In 2009, the profits for its Illinois utilities more than doubled. This is not a company that needs or deserves a massive rate hike.
-Ameren's rate-hike request is a slap in the face to consumers who already are struggling to pay monthly bills during an economic downturn.
-The ink was barely dry on Ameren's $162 million rate hike in 2008 and the company was back at the table, asking for more.
-The company's timing is horrible. Not onnly did it ask for the rate hike in the middle of an economic downturn, but the request came the same week that the rates consumers pay for the actual electricity went down. Ameren's request to raise the "delivery" charges threaten to hijack those savings.
-CUB released a study showing that Amerenn's electric utilities were among the most inefficient in the nation. We are not Ameren's personal ATM machine. The company's executives should get their own house in order before they ask their customers for a pay raise.