Eric DeBellis, CUB General Counsel;
CUB’s expert testimony has uncovered hundreds of millions of dollars in questionable spending in Ameren Illinois’ proposed four-year plan for improving its power grid. The watchdog warned that the costs of the plan should be reduced substantially to prevent electric bills from being unaffordable.
(Sign CUB’s petition urging the ICC to hold Ameren accountable.)
“Ameren’s proposed grid plan is excessively costly to customers. It’s never okay to overspend with other people’s money, but it is especially disturbing in light of the fact that Central and Downstate Illinois households and businesses have been slammed the last several years with cost increases for every other necessity–like housing, groceries, and gas,” CUB General Counsel Eric DeBellis said. “CUB’s expert testimony reveals that Ameren’s grid plan is littered with wasteful spending. Ameren’s parent company is raking in big profits, while a lot of their customers struggle with high bills. We urge state regulators to protect customers and hold this monopoly accountable.”
In January, Ameren filed a $2.8 billion, four-year plan for upgrading its local distribution system before the Illinois Commerce Commission (ICC) (Docket 26-0051). The plan, which would cover 2028 through 2031, represents about a 48 percent increase from Ameren’s current grid plan. Once the grid plan is approved, Ameren, in 2027, will propose to the ICC a four-year rate plan to pay for the grid work
These cases are important, because under regulatory law, utilities earn a return on their capital investments–and they always propose bloated plans to increase their profits. The Climate and Equitable Jobs Act (CEJA), landmark energy legislation passed in 2021, holds Ameren more accountable by requiring that the utility prove that its grid plan incorporates the state’s clean energy goals and at the same time is affordable and beneficial to customers.
In 2023 the ICC rejected the utility’s first proposed grid plan for, among other things, failing to prove affordability. Ameren’s second plan was approved, after consumer advocates helped cut the utility’s $333 million in proposed spending by about 75 percent.
CUB analyzed Ameren’s new plan through expert testimony from Brubaker & Associates and Current Energy Group. In total, CUB called for cutting more than $300 million in wasteful or questionable spending. Some highlights from the testimony:
- CUB urged the ICC to make substantial cuts in Ameren spending in the name of affordability. While Ameren claims total bills will grow by about 2 percent to 3 percent a year, electric delivery costs alone are projected to increase by nearly 4 percent, exceeding the 3.4 percent annual forecasted inflation, CUB’s testimony argued.
- Casting doubt on the credibility of Ameren’s grid plan, the utility admitted that its claims of an increase in electricity demand is driven by a single large customer, and that customer is slated to connect at the transmission level, skipping Ameren’s distribution system altogether. When this customer’s potential electricity use is removed, the actual load supported by Ameren’s distribution system is forecasted to decline.
- CUB’s testimony argued that in future grid plans, Ameren should be required to demonstrate for certain investments above $1 million that it looked at a number of alternatives to expensive capital projects, including “demand response” programs that can lower peak demand, technology that can reduce the impact of outages, and accelerated maintenance versus rebuilding parts of the network.
- CUB also called for Ameren to develop and file a formal “large load” queue process to properly assign infrastructure costs to the large customers–including data centers–that cause those costs. Grid upgrades to facilitate connecting these large customers to the system benefit those customers specifically, calling into question the CEJA-mandated cost-effectiveness of these investments for the rest of customers who are paying for them.
- Below are highlights of CUB’s proposed cost reductions:
- Ameren proposed an additional $125 million in capital spending to meet new reliability metrics put forth by CEJA. But the utility didn’t consider any alternatives: For example, vegetation management can cost-effectively promote reliability–but Ameren can’t earn a return on that type of spending because it is considered operations and management and not capital spending.
- Ameren overstated the number of customers who will be added to its system over the next four years. Given that Ameren’s load forecast is set to decline in future years, CUB recommended a $78.4 million spending reduction to better match the likely customer additions in years to come.
- Ameren wants customers to cover a $44.1 million Proactive Economic Development (“PED”) initiative, which is a fund for infrastructure “that has no identified purpose or confirmed customer need.” CUB’s testimony rejects that spending, saying Ameren customers “should not bear the risk of stranded assets resulting from ‘build it and they will come’ investment strategies.”
- Ameren proposes a budget increase for a category of expenses covering reliability projects under $100,000. Actual expenditures for this project during 2024 and 2025 were significantly lower than forecasted, and Ameren offered no reason to believe this time will be different, CUB argued. The watchdog recommended a $59.2 million reduction in spending.
- Ameren’s grid plan would require customers to bear the $20.3 million financial burden of an unprofitable hydrogen generation pilot project. Without firm cost estimates or proof that this project could have broad benefit, it is not a prudent use of customer money, CUB argued.
- Ameren’s plan also overstated how many poles it will replace over the four years, since the utility has a history of falling significantly short of its work forecasts. CUB recommended a $14.7 million reduction in spending.
ICC judges will issue a proposed order in the case in October. A final order is due around November/December. This case will decide the grid plan only. How Ameren charges customers for the upgrades will be decided in a multi-year rate plan case in 2027.
