Ameren Asks Legislature for an Expensive Fix for What’s Not Broken

Editorial, St. Louis Post-Dispatch, February 26, 2013

Ameren Missouri performed admirably during the snow and ice storm that swept through the St. Louis region last Thursday.
A mere few thousand area residents were without power for relatively short periods of time due to downed lines or other electrical outages. Investments made by the investor-owned utility since its pitiful performance during a series of storms in 2006 and 2007 paid dividends.

The 2006 ice damage, of course, was significantly worse than this year’s. Hundreds of thousands of St. Louisans were plunged into darkness and cold, some for a week or more. Since 2007, the company has invested more than $1 billion in burying power lines, replacing light poles and improving its transmission grid.

So Ameren has proved that it can spend the money it needs to upgrade its system — and have that money repaid through the standard rate-making process. That makes the company’s latest attempt to squeeze consumers seem altogether unnecessary.

As it has each of the last few years, Ameren has filed a bill in the Missouri Legislature that it portrays as a way to bring jobs to the state, advance the state’s energy policies and improve Ameren’s ability to invest in future infrastructure needs.

This year’s Ameren bill is slightly different from early iterations, but it has this in common: Like the earlier bills, it would give the company permission to bypass the rate-making process and charge customers for improvements on a pay-as-you-go basis.

This year, Ameren is asking lawmakers to pass a new surcharge, which Ameren compares to one passed by the Legislature for gas and water companies in 2003. The surcharge would allow Ameren to recoup its costs of investment in transmission lines and other investments more quickly than the traditional rate case process does. If passed, it would signal Wall Street that Ameren could more easily raise money from consumers and thus reduce the company’s borrowing costs.

One of many problems with Senate Bill 207, which passed out of committee last week, is that Ameren’s proposed surcharge is really not much like the gas and water surcharge at all. The definitions in the bill allow Ameren to use the proposed surcharge to collect revenue for nearly any sort of investment it would make. Worse, the bill proposes changes to Missouri’s regulatory environment that would reduce, if not entirely erase, incentives for the electric monopoly to control its costs.

That’s why consumer groups are opposing this year’s Ameren legislation, much as they did last year, and the year before that, and the year before that, when the company was seeking a weaker regulatory environment to build a nuclear plant that the market won’t support. That history is key to getting to the bottom of what Ameren really wants: To enjoy the protections of its monopoly status while minimizing regulatory oversight.

As a regulated monopoly, Ameren must make most of its future plans known, years in advance. It has to go before the Public Service Commission and other regulatory bodies and file detailed paperwork outlining its intentions and documenting its costs.

Nowhere in its existing files at the Public Service Commission is a new plan that calls for a massive infrastructure investment. Indeed, in getting five rate increases in the last six years from the Public Service Commission, Ameren had to demonstrate that it had been prudently investing in its ability to provide safe and reliable power. So now it needs a special infrastructure surcharge to do what it already has been doing?
In effect, Ameren’s success in keeping power on during recent storms belies its sales pitch to lawmakers. The system isn’t broke, but Ameren wants the Legislature to fix it, anyway.

The worst part of Senate Bill 207 has nothing to do with a new surcharge. The bill also would allow Ameren to recoup spending that the utility might make in a variety of categories, including labor, above the limits currently deemed prudent by the Public Service Commission. What this change, referred to as a “tracker,” would do is reduce the incentive that Ameren executives have now to control costs. It would take away some of the leverage held by regulators.

This is Ameren’s Holy Grail. The one constant between its proposals when it was selling a nuclear revival and the one in which it pretends to be a gas or water company, is that every bill contains language that would weaken the role regulators have in protecting consumers.

Getting “regulators” out of the way of “job-creators” has great appeal for the Republican-controlled Legislature, even though the argument is bogus. Ameren Missouri is no traditional swashbuckling capitalist “job creator.” It’s a regulated monopoly. The rates it charges have an effect on everything that other companies charge for their goods and services.

It’s why those companies, along with consumer groups that represent senior citizens on fixed incomes, oppose attempts to erode Missouri’s regulatory environment for investor-owned utilities.
We join those groups in opposing Senate Bill 207.

When Ameren shared its plans to seek a new surcharge with us this year, we held out hope the utility company would seek a very limited change to the law that might find some support with consumer groups. Instead, it followed old habits of seeking massive change with little justification.

The record shows Ameren is doing just fine in the current regulatory environment. Five rate hikes in six years is Hall of Fame-level stuff.

Ameren Missouri’s profits are meeting or exceeding expectations. Its executives consistently rake in millions of dollars in bonuses. Its investment in its infrastructure, under the current system is keeping the lights on.

The current system works for everybody. The Legislature should leave it alone.