ST. LOUIS, Feb. 3, 2012 /PRNewswire/ -- Today, Ameren Missouri, a utility company of Ameren Corporation (NYSE: AEE), filed an electric rate increase request with the Missouri Public Service Commission (MPSC). Ameren Missouri is committed to providing its customers with safe, reliable, affordable and environmentally responsible energy. To achieve these objectives, the company has made significant investments in its energy infrastructure, some of which are not currently included in its electric rates. Ameren Missouri is now seeking to be reimbursed for these investments and other operating costs in its rates. Today, Ameren Missouri's average electric rates are approximately 25% below the national average and the lowest of any investor-owned utility in Missouri.
"Our customers have consistently told us that reliability is their highest priority and that they also want cleaner air," says Ameren Missouri Chairman, President and CEO Warner Baxter. "Over the last several years, we have made significant investments in our infrastructure that are producing results. Over the last five years, distribution system reliability and sulfur dioxide emissions at our power plants have improved significantly for the benefit of customers."
Ameren Missouri's rate increase request is approximately $376 million, which is a 14.6% increase in customer rates. If approved, the average residential electric bill would increase about 46 cents a day (based on approximately 1,100 kilowatt-hours of usage per month).
Key components of the company's request are:
- Investments made primarily to improve the reliability of Ameren Missouri's aging infrastructure and to comply with environmental and renewable energy regulations comprise approximately $85 million (about 23%) of the increase request.
- Higher net fuel costs for power plants account for approximately $103 million (about 27%) of the request.
- Higher costs for the company's recently proposed energy efficiency programs comprise approximately $81 million (about 22%) of the request. These programs are expected to provide approximately $500 million in total customer benefits over the next 20 years.
- Additional cost increases, including those to meet renewable energy requirements, material costs and employee benefits.
While Ameren Missouri must recover its costs and earn a fair return on investments to enable it to meet its customers' expectations for safe and reliable service, the company also recognizes this rate increase will create a hardship for some customers. The company is taking actions to help customers manage their rising energy costs and usage now and in the future.
"We have already taken several steps to manage our costs in a disciplined fashion, while continuing to deliver safe and reliable services," says Baxter. "Every year since the 2008 financial crisis, we have reduced our combined non-fuel related operating and capital expenditures. In 2011, our expenditures were in excess of $300 million below 2008 levels. In late 2011, we also reduced staffing levels by approximately 340 employees through a voluntary separation program. In addition, we are seeking approval to significantly enhance our energy efficiency programs, while still offering energy assistance for customers most in need."
The company offers budget billing and supports energy assistance programs for customers who are least able to pay their bills. Virtually all of the costs associated with these programs are excluded from customers' rates, including the company's commitment of $2 million of additional energy assistance funding.
A primary driver for this rate case is the infrastructure investment that Ameren Missouri is making to serve its electric customers. The ability to make timely infrastructure investments is critical to Missouri's energy future because of the need to meet stricter environmental and renewable energy regulations, as well as to make improvements to an aging infrastructure to meet customers' number one priority – reliability.
Over the past several years, Ameren Missouri has made significant infrastructure investments to meet its electric customers' increasing expectations for reliable service and cleaner air. Since 2006 those investments have reduced outage frequency by 27%, reduced sulfur dioxide emissions by 27%, and improved power plant performance.
In order to continue to meet our customers' expectations, the company is seeking reimbursement for more than $700 million of investments that will be serving customers, but are not currently included in rates. Under the regulatory framework, these investments will be recovered in rates over the service life of the investments.
These investments include costs associated with the Ameren Missouri Maryland Heights Renewable Energy Center. This center will be the largest landfill gas-electric facility in Missouri and among the largest in the nation. The energy center will utilize methane gas from decaying trash to generate clean, renewable electricity and meet the energy needs of about 10,000 homes. Ameren Missouri is also seeking to recover costs from several major storms that are not fully reflected in our rates, including the devastating tornado that swept through St. Louis in April 2011.
Net fuel costs are rising primarily due to increases in the price of fuel, such as low-sulfur coal, to generate electricity and the transportation costs to bring coal to our facilities. Absent initiation of this rate filing, 95% of this amount would have been reflected in rate adjustments implemented under Ameren Missouri's fuel adjustment clause (FAC).
Another important driver for the rate increase is the energy efficiency programs that were proposed as part of Ameren Missouri's January 2012 filing under the Missouri Energy Efficiency Investment Act. The proposed energy efficiency programs will provide approximately $500 million in total customer benefits over the next 20 years and continue the significant commitment Ameren Missouri has made to energy efficiency in the past. Our proposal includes investments of approximately $145 million over three years, beginning January 1, 2013. These programs are expected to provide annual energy savings of approximately 800 million kilowatt-hours, which is equal to the annual energy consumption of more than 60,000 average Missouri homes.
The rate increase request is based on a 10.75% return on equity, a capital structure composed of 52% common equity, an aggregate electric rate base of $6.8 billion, and a test year that ended September 30, 2011, with certain pro-forma adjustments through the anticipated true-up date of July 31, 2012.
Ameren Missouri's request will be carefully reviewed by the MPSC, staff, and many other parties. This process will take up to 11 months. A decision by the MPSC on this rate case is expected by December 2012.
Ameren Missouri has been providing electric and gas service for more than a century, and our electric rates are among the lowest in the nation. We serve 1.2 million electric and 126,000 natural gas customers in central and eastern Missouri. Our mission is to meet their energy needs in a safe, reliable, efficient and environmentally responsible manner. Our service area covers 63 counties and approximately 500 towns, including the greater St. Louis area. For more information, visit AmerenMissouri.com.
Statements in this release not based on historical facts are considered "forward-looking" and, accordingly, involve risks and uncertainties that could cause actual results to differ materially from those discussed. Although such forward-looking statements have been made in good faith and are based on reasonable assumptions, there is no assurance that the expected results will be achieved. These statements include (without limitation) statements as to future expectations, beliefs, plans, strategies, objectives, events, conditions, and financial performance. In connection with the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, we are providing this cautionary statement to identify important factors that could cause actual results to differ materially from those anticipated. The following factors, in addition to those discussed under Risk Factors in Ameren Corporation's and Ameren Missouri's Form 10-K for the year ended December 31, 2010 and elsewhere in this release and in our other filings with the Securities and Exchange Commission, could cause actual results to differ materially from management expectations suggested in such forward-looking statements:
- regulatory, judicial, or legislative actions, including changes in regulatory policies and ratemaking determinations, such as the outcome of the Ameren Missouri electric rate case filed in 2012; the court appeals related to Ameren Missouri's 2010 and 2011 electric rate orders and Ameren Missouri's FAC review; and future regulatory, judicial, or legislative actions that seek to change regulatory recovery mechanisms;
- changes in laws or regulations that adversely affect the ability of electric distribution companies and other purchasers of wholesale electricity to pay their suppliers, including Ameren Missouri;
- increasing capital expenditure and operating expense requirements and our ability to recover these costs through our regulatory frameworks;
- the effects of our and other members' participation in, or potential withdrawal from, the Midwest Independent Transmission System Operator, Inc. ("MISO"), and the effects of new members joining MISO;
- the cost and availability of fuel such as coal, natural gas, and enriched uranium used to produce electricity; the cost and availability of purchased power and natural gas for distribution; and the level and volatility of future market prices for such commodities, including the ability to recover the costs for such commodities;
- the level and volatility of future prices for power in the Midwest;
- the development of a capacity market within MISO;
- business and economic conditions, including their impact on interest rates, bad debt expense, and demand for our products;
- disruptions of the capital markets or other events that make Ameren Corporation's or Ameren Missouri's access to necessary capital, including short-term credit and liquidity, impossible, more difficult, or more costly;
- our assessment of our liquidity;
- the impact of weather conditions and other natural phenomena on us and our customers;
- the impact of system outages;
- generation, transmission, and distribution asset construction, installation, performance, and cost recovery;
- impairments of long-lived assets, intangible assets, or goodwill;
- operation of Ameren Missouri's Callaway energy center, including planned and unplanned outages, decommissioning costs and potential increased costs as a result of nuclear-related developments in Japan in 2011;
- the impact of current environmental regulations on utilities and power generating companies and the expectation that new or more stringent requirements, including those related to greenhouse gases, other emissions, and energy efficiency, will be enacted over time, which could limit or terminate the operation of certain of our generating units, increase our costs, result in an impairment of our assets, reduce our customers' demand for electricity or natural gas, or otherwise have a negative financial effect;
- the impact of complying with renewable energy portfolio requirements in Missouri;
- labor disputes, work force reductions, future wage and employee benefits costs, including changes in discount rates and returns on benefit plan assets;
- the cost and availability of transmission capacity for the energy generated by the Ameren companies' energy centers or required to satisfy energy sales made by the Ameren companies;
- legal and administrative proceedings; and
- acts of sabotage, war, terrorism, or intentionally disruptive acts.
Given these uncertainties, undue reliance should not be placed on these forward-looking statements. Except to the extent required by the federal securities laws, we undertake no obligation to update or revise publicly any forward-looking statements to reflect new information or future events.
SOURCE Ameren Missouri
Media, Rita Holmes-Bobo, +1-314-554-2182, email@example.com, or Analysts, Doug Fischer, +1-314-554-4859, firstname.lastname@example.org, both for Ameren Missouri