ST. LOUIS -- A Cole County circuit judge has upheld Ameren Corp.'s $43 million annual rate increase, which the Missouri Public Service Commission awarded to the St. Louis-based utility in May.

Attorney General Jay Nixon pledged to appeal.

Circuit Judge Richard Callahan issued a ruling Thursday affirming the PSC's decision, which had pleased none of the parties. The PSC decision had been appealed by Ameren, the state Office of Public Counsel and the state attorney general's office.

Ameren said the increase was too modest and wouldn't cover its costs.

State public counsel Lewis Mills Jr., who represents consumer interests, and Nixon, who represents the state, argued that Ameren deserves no increase and instead should be forced to lower its electricity rates.

Plans to appeal

Nixon spokesman John Fougere said Nixon planned to appeal Callahan's decision, out of his "commitment to protecting the rate payers and Missouri families from the beginning in this case."

Ameren said it hadn't decided. A call to Mills on Friday was not immediately returned.

"We are disappointed that [Callahan] didn't see our point of view on our rate of equity being below where it should be," Ameren said in a statement. "But we are pleased that he didn't sustain the position of those who were challenging us on other issues."

Ameren had sought a $361 million rate increase for its 1.2 million Missouri electric customers. It contended that the "modest increase" it received would still leave rates 37 percent below the national average and would make it difficult for the company to cover rising costs and infrastructure needs.

A key issue in the appeal is the 10.2 percent return on equity, or profit level, that Ameren was granted by the PSC.

Rate disputed

In reaching that decision, utility regulators cited the testimony of a particular expert witness who had recommended a 9.8 percent rate. But the PSC concluded that rate should be raised a bit to account for the PSC's denial of a fuel adjustment clause, which would have allowed Ameren to raise consumer rates when its cost for fuel rose.

The attorney general and public counsel's offices both claim the PSC had no basis to make that upward adjustment.

Ameren, which originally sought a 12 percent return on equity, contends the PSC should have used a Midwest average as a basis for deciding its rate. In an unsuccessful rehearing request to the PSC, Ameren asked for a rate of at least 10.9 percent.

Callahan ruled that the PSC made a "reasonable" and "lawful" decision in awarding Ameren a 10.2 percent return on equity.

Among the eight other issues on appeal is whether the PSC fully accounted for the December 2005 collapse of Ameren's Taum Sauk reservoir. Ameren has assured that no costs associated with the reservoir collapse will be passed on to customers.