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CUB and IIEC: Proposed Ameren Illinois Rate Cut Should Be Doubled to $30M

August 17, 2016 By Cheryl Kaften

An electric rate cut that Ameren Illinois has proposed to the Illinois Commerce Commission (ICC) (Docket No. 16-0262) for 2017 should be doubled, to a decrease of about $30 million, according to expert testimony commissioned by two ratepayer advocacy groups – the Citizens Utility Board (CUB) and the Illinois Industrial Energy Consumers (IIEC).

In a filing last April, Ameren asked the Illinois Commerce Commission (ICC) for a $14.4 million decrease in delivery service rates, to be effective next January 1. The company said that this would be the fourth such rate decrease in the years since the landmark Energy Infrastructure Modernization Act (EIMA) was passed in 2011, “enabling the utility to accelerate its efforts to modernize the grid and provide consumers with more efficient, reliable energy delivery.”

On August 12, CUB asked consumers to visit www.CitizensUtilityBoard.org, where they can send a message to the Illinois Commerce Commission (ICC), the state’s utility regulator, urging it to approve a larger decrease.

“We are glad that Ameren Illinois has proposed a rate cut for its customers, but our expert testimony shows that customers deserve double the decrease,” CUB Executive Director David Kolata said. “We’re going to do everything we can to make sure customers get a fair rate cut.”

Delivery rates, which take up about one-third to one-half of Ameren electric bills, are determined annually by formula, under a state law to help pay for high-tech upgrades to the power grid. Ameren’s proposed decrease means  that the revenue the utility is gaining has caught up with the cost of the upgrades. CUB hopes the decrease is a sign that the upgrades are starting to benefit consumers.

This summer, an expert analysis commissioned by the CUB and the IIEC found that the rate cut should be even larger. Michael Gorman, of Brubaker & Associates, a Missouri-based consulting firm that specializes in utility regulation, pinpointed inflated costs in Ameren Illinois’ proposal and recommended an additional $15.5 million reduction—for a total rate cut of about $29.9 million.

Gorman explained that Ameren’s parent company uses an affiliated services company to perform the day-to-day administrative tasks for all companies under the Ameren umbrella. Ameren Illinois, the electric utility, shares these administrative costs with its sister companies, and requests that a certain portion of the costs be included in delivery rates.

However, Gorman argued that back in 2013, Ameren. divested itself of a generation business, and that should have brought down administrative costs for Ameren Illinois. Instead, the costs went up. Gorman also argued that the administrative costs were unreasonably high, and that the parent company should be shifting more of those costs from Ameren Illinois to a transmission affiliate.

The Illinois Commerce Commission has a total of eight months to fully review and make a determination on Ameren Illinois’ rate reduction request.

UPDATE, AUGUST 18:

Ameren Illinois spokesperson Marcelyn Love emailed the following statement to Retail Energy Buyer: “This is the fourth rate decrease Ameren Illinois has proposed since 2011, totaling more than $128 million. During that time we have developed a stronger, more technologically-advanced grid that has increased reliability by 17% while keeping  electric rates below the national average.

“It’s ironic,” Love said, “that CUB fails to disclose that they receive millions of dollars each year from utility customers under this legislation that they annually criticize. Ameren Illinois plans to continue to focus on building a stronger electric grid, supporting our communities and delivering new technology that will help our customers use less energy and save more of their money.”

 

 

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