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Merry Christmas, Ameren UE ratepayers.
The state Public Service Commission (PSC) granted the utility a whopping $260.2 million increase effective in January—a 10 percent raise that will hit the typical residential customer with an annual increase estimated at $120 for the coming year, the fifth increase given to the utility in the past six otherwise-not-so-inflationary years.
Here’s the really unsettling part: The system worked as intended.
After holding hearings around the state in which the PSC commissioners were implored by the little people not to raise rates, they gave Ameren UE “only” about two-thirds of the $376 million it was requesting and “only” about 25 percent more that consumer advocates, including the state public counsel, testified was fair.
Ameren was subdued in its response to the PSC decision. Consumer advocates were unhappy. The PSC chairman was defensive. In other words, a grand compromise was presumably achieved, which is what is supposed to happen.
It really makes you wonder about this system of publicly regulated private monopolies.
Had this been a tax increase approved by the state government—rather than a utility-rate increase approved by the state government—we can assume that masses would have stormed the State Capitol building with torches and Tea Party banners. At this point, it’s unclear how much this rate increase will affect commercial users, which usually represent about half of Ameren’s revenues, but we do know that if those businesses were hit with a tax increase for the same amount (whatever it might be), the expenditures would be described as “job killing.”
Ameren had argued its Missouri customers pay substantially less for its services than the national average. Perhaps, but the same can be said of what those same individuals and companies pay in state taxes, and no one in the state legislature is calling for 10-percent increases in taxation to address the state's 40-something ranking in education spending and the like.
So how will this $10-per-month utility-bill increase work out for you next year? And how would you compare it to, say, a $10-per-month increase in your taxes?
Here’s a wild guess: That would be about the same.
In fairness, slightly more than a third of the increase ($89 million) was allocated for energy-efficiency measures that, in theory, could save consumers on their utility bills in the long run, mitigate the need for Ameren to ask for another rate increase next year, and even lessen the need for new power plants to be constructed.
My theory is that you can forget that theory. Ameren officials have really no choice but to ask for more money every year—they have stockholders, after all—and the PSC commissioners have no choice but to weigh the utility’s request. There’s that statute assuring the utility monopolies of a fair rate of return, after all.
Now, back to your holiday celebration.
Commentary by Ray Hartmann