PSC to review motion asking for undoing of Ameren rate increase

Recent Ameren Missouri rate increases could be repealed as early as next week, returning rates to 2007 levels.

Lewis Mills of the Office of the Public Counsel, which represents Missouri's residential utility customers, filed a motion last month asking the Missouri Public Service Commission to undo a $161.7 million rate increase it granted to Ameren in 2009 and a $226.3 million increase approved last year.

On Wednesday the PSC will discuss the motion, in which Mills argues the commission has not followed orders from Cole County Circuit Judge Paul Wilson to suspend the rate increases and return to Ameren's 2007 rates.

Ameren said in recent filings with the Securities Exchange Commission that if the rate rollback is approved, it could lose $300 million between March and August.

"Replacing our current rates with rates back to 2007 would result in significant financial harm to the company, including significantly impacting the cash we have available for our operations and for providing service to our customers," said Rita Holmes-Bobo, Ameren communications manager.

A reduction in rates will not likely result in a refund to customers, according to Ameren's SEC filings.

In the meantime, Ameren has its third rate increase request in three years -- this time to raise rates by $263 million -- currently under review by the PSC. A decision on that rate increase is expected this summer.

Ameren filed a response to Mill's rollback request with the PSC, saying it doesn't believe the commission has jurisdiction to adjust its rates because Wilson's judgment is under appeal, said PSC chairman Kevin Gunn.

"We are trying to figure out complex legal and procedural issues," Gunn said. "We're in uncharted territory here. We're talking about how this decision will impact other rate cases that are ongoing."

Wilson's decision, setting the Ameren rollback attempt in motion, was in response to a circuit court appeal of the PSC's approval of rate increases. The appeal was filed by Noranda Aluminum, which has a plant in New Madrid, Mo., and is Ameren's biggest customer, and by other industrial customers such as Anheuser-Busch, Doe Run and Enbridge.

A call requesting comment from Noranda spokesman Charles Skoda was not returned Wednesday.

Although Wilson's decision was made in December, it required the industrial customers to post bonds totaling hundreds of thousands of dollars before his ordered stay of the rate increases would take effect. The bonds were posted Feb. 15, and the next day Mills filed his motion with the PSC requesting the rate increases be suspended for all Ameren customers, not just the industrial customers, which he said was the intent of Wilson's decision.

"I don't see that they have a whole lot of choice," Mills said about the PSC. "They have to do what the circuit court is telling them to do."

Mills' motion asks the PSC to change Ameren's official tariffs, which specify its rates and terms of service in the state.

"We believe the Missouri PSC made the correct decisions to increase our rates in 2009 and 2010. Those increases were consistent with our need to be reimbursed for significant levels of investment and higher operating costs so that we could continue to deliver safe and reliable service to our customers," Holmes-Bobo said. "Those decisions were made after an extensive 11-month review of the facts in those cases."

Ameren will "vigorously defend" its position before the PSC and in the courts, she said.

mmiller@semissourian.com

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