Learn the Issues, Get the Facts
- Ameren has already spent at least $25 million towards pursuing an early site permit. Ameren willingly spent its own money and as with any other business, Ameren ought to be spending its own money on this speculative venture, rather than seeking a bailout through HB 1316.
- HB 1316 does not guarantee customers will be paid back their money in the case that a new electric plant is never built.
- HB 1316 will cost Missouri businesses and residents $45 million plus interest and Ameren earnings for 20 years totaling an increase of $115 million.
- HB 1316 will produce ZERO watts of electricity. This legislation will not result in a new electric power plant.
- HB 1316 will create ZERO jobs. This legislation has nothing to do with building a new electric power plant that would actually create jobs.
- Ameren says it needs this legislation to maintain the option of seeking an Early Site Permit toward building a second nuclear power plant. At the same time the bill protects Missouri employers, businesses and residential ratepayers if Ameren proceeds as it has indicated it would.
- The bill also protects business and residential ratepayers if Ameren is wrong and holds Ameren accountable.
- The bill represents a compromise that gives Ameren everything it says is needed to obtain an Early Site Permit and that protects businesses and residential consumers who are being asked to pay for the Early Site Permit.
- This bill allows Ameren to recover from ratepayers financing costs on $40 Million of expenditures to obtain an Early Site Permit.
- Consumer protections include the same three requests that were made by consumer groups this past November:
- A hard cap on expenses to ensure Ameren doesn’t charge consumers for cost overruns.
- This is important to avoid the mistakes and huge overruns that have historically plagued the building of nuclear plants.
- Consumers must be protected from cost overruns at all stages of the process.
- A rebate to ensure consumers are refunded their money if energy is never produced or the Early Site Permit is never obtained.
- Ameren has already spent $25 million dollars towards obtaining an Early Site Permit. A rebate is necessary to keep Ameren from shifting the gamble and all of the risk on getting the permit to consumers.
- Assessment funding for the Office of Public Counsel
- This takes the Governor’s proposal and makes sure legislative intent for funding the OPC is established and better secures the funding beyond FY 2012, which is the only year the Governor’s proposal ensures.
- Consumers need an adequately funded independent OPC to ensure consumers are protected through the entire process of building the nuclear plant.
- A hard cap on expenses to ensure Ameren doesn’t charge consumers for cost overruns.
“Ameren Demands $263 Million Rate Hike”
- Raise electricity rates on Missouri’s working families and employers by $263 million.
- Drive up the cost of doing business in Missouri Ameren’s rate hike plan comes at a time of crisis for Missouri’s economy. Missourians are losing their jobs. Missouri businesses are being forced to downsize in order to stay afloat. Missouri’s employers and small businesses are already struggling to prevent layoffs of even more workers.
- Drive up the cost of living for already struggling Missouri families Ameren’s $263 million rate hike demand before the PSC comes at a time when Missouri’s employers and small businesses are hurting and at a time when Missouri families are hurting even more. In this fragile economy, thousands of families live on the brink of financial disaster.
“The Nuclear Option”
- The fact that Ameren is seeking money from ratepayers and cannot get private backing means that there is substantial financial risk in building a second nuclear power plant.
- Missouri’s other nuclear power plant was built without a rate-hike in advance of the plant.
- Ameren made over $600 million last year and is still seeking to raise rates on consumers.
- Ameren has already raised energy rates several times in the past few years, and is now looking to raise them again.
- Other states have allowed energy companies to pass on development costs to ratepayers, and consumers in those states have seen their electric bills skyrocket.
- The development of a new power plant is financially risky, which is why Ameren wants to raise energy rates to cover the costs, instead of using their own money.
- Ameren is seeking to transfer the financial cost of energy development to their consumers in order to appease their shareholders.
- Robust Office of Public Counsel (OPC). Over the years funding for consumer protection has been greatly reduced impairing the ability of OPC and PSC to conduct adequate reviews of rate case filings. Legislation must include funding OPC that allows them to conduct thorough audits of rate cases filed with the Public Service Commission.
- Responsible Cap. Should the Legislature consider the utility’s proposed legislation allowing them to recover costs of construction while in progress, they must include a reasonable and fair cap on rate increases to keep energy costs from spiraling out of control. To ensure consumers money is well spent, each step of the construction process should be monitored and controlled.
- Rebate. If ratepayers pay tens of millions of dollars in rate increases and a plant is never built or the permit is sold at a profit, Missouri ratepayers deserve to be refunded in full. We believe these consumer protections to be essential for the health of Missouri’s energy future, and therefore, Missouri economy.
The “Bad Debt Surcharge” is Unfair to Consumers
- Two bills before the legislature in 2010 (SB 705 and HB 1610) would have allowed increases on natural gas bills to pay the utility for the bad debts of its non-paying natural gas customers, overriding the current consumer protection against such single-issue ratemaking.
- This legislation would have allowed energy rates to increase, even at times when Laclede Gas Company or Missouri Gas Energy’s overall cost of doing business was not going up!
- Bad debts are already included in rates. When a utility needs to adjust rates, including for bad debt, it may initiate a rate case. The Bad Debt Surcharge would allow accelerated increases without the protections of a full rate case audit.
- This Bad Debt Surcharge would have increased the volatility of natural gas bills, due to the correlation between wholesale gas rates and uncollectible accounts.
- The Bad Debt Surcharge would have been a hidden surcharge. By cleverly attempting to redefine certain bad debts as “gas costs”, it would have been disguised in the Purchased Gas Adjustment (PGA), instead of being identified separately on gas bills.
- The legal purpose of the PGA is solely for recovering the wholesale cost of natural gas—not to compensate the utility for bad debt. In 2009, the Missouri PSC ruled unanimously that bad debt is not a “gas cost” [Case No. GT-2009-0026].
- This legislation would have decreased the utility’s incentive to effectively manage its bad debt accounts and increased the incentive to write off accounts early and pass those costs through the PGA. However, writing off accounts as “uncollectible” does not stop the utility from continuing to attempt collection from the customer who owes the debt.
- The Bad Debt Surcharge also reduces the utilities’ risk, and therefore increases their profits. These companies are already compensated for this risk through the return on equity (ROE) component of rates. Laclede and MGE are already permitted double-digit ROEs. In other states, it has been estimated that such surcharges would enhance earnings by 0.75% to 0.95%.
Single Issue Ratemaking
Ameren Demands 18% Rate Increase
- Raise electricity rates on Missouri’s working families and employers by 18%.
- Resulted in an immediate rate hike on Missouri’s electricity users. If Ameren has their way, Missouri’s families and employers would have had their electricity rates raised immediately, during one of the most difficult economic downturns we’ve seen in decades.
- Ameren’s original request would have allowed them to raise rates more frequently.Despite the fact that they enjoy a monopoly, Ameren isn’t content with its profits. Buried in the fine print of of its 18% rate hike request was a plan to allow it to raise rates on struggling Missouri families more often through rate increase surcharges on customers’ electric bills. If Ameren had their way, Missourians would need to be prepared for more frequent rate increases!
- Cause Missouri job losses. Missourians are losing their jobs. Missouri businesses are being forced to downsize in order to stay afloat. Hiking rates on Missouri’s employers and small businesses when they’re already struggling will force many to lay off even more workers.
- Push already struggling Missouri families into poverty. Rate increases will hurt Missouri’s employers and small businesses but it will hurt Missouri families even more. In this fragile economy, thousands of families live on the brink of financial disaster. Electric rate increases will cause the number of Missouri families living in poverty to increase.
Thank you for stopping by St Louis Renewable Energy. Feel free to comment in the section below or contact Scotty for any Home Improvement Projects or Energy Reducing Needs and Scotty, Scotts Contracting will respond ASAP. Company Web Address: http://www.stlouisrenewableenergy.com