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5 things you should know about Ameren’s $45 million electric rate cut

Ameren_fbGood news just in time for the holidays! The Illinois Commerce Commission (ICC) has ordered a $45 million rate cut for Ameren electricity customers. Key points about the decrease:

When it takes effect: Jan. 1, 2014.

What’s behind the change: It’s part of Ameren’s new “formula rate.” Back in 2011, the Illinois General Assembly decided that Ameren and ComEd could start using a formula to determine delivery rates, in order to pay for about $3 billion in upgrades to the power grid. While seeing excellent potential consumer benefits from these upgrades (see CUB’s “smart grid” fact sheet), CUB opposed the legislation because it had too few consumer protections.

Why rates are going DOWN, not UP: Given CUB’s concerns about “formula rates,” you may wonder why Ameren’s rates are going down. That’s because Ameren has yet to dive into major “smart grid” upgrades. In mid-2014, the company plans to begin a decade-long installation of digital “smart meters” across about 60 percent of its territory. So rates could go up accordingly, beginning in 2015.

Where you’ll see the rate reduction: This decrease impacts the delivery section of your power bill, covering the costs of getting the electricity to your home. Traditionally, delivery charges take up about a third to a half of your bill. Charges for the electricity itself take up the rest.

Ameren didn’t want to give you this much: Ameren’s proposed rate cut was about $37 million, but consumer advocates pushed for a decrease that was closer to $50 million. The ICC voted for $45 million, saying that the company had “overcollected” on its previous rates. This is a victory for Ameren customers!