Dive Brief:
- Ameren Missouri told state regulators last week that it is not moving ahead with $1 billion in infrastructure improvements because the current process for setting rates means it cannot recover investments in a timely manner, the St. Louis Business Journal reports.
- The St. Louis Business Journal reported Ameren wants to undertake grid hardening projects between 2018 and 2022, including substation upgrades, replacing power cables and a smart meter program.
- Ameren has proposed changing the ratesetting process to allow annual, formulaic increases based on the prior year's costs.
Dive Insight:
Ameren proposed changes to how its revenue requirements are set earlier this year, but it received a chilly reception from regulators worried costs would escalate quickly. Now the utility is saying it has infrastructure upgrades it would like to make, but cannot, because it can take almost a year to work through a rate case.
"The regulatory lag built into Missouri’s decades-old rate setting process prevents full recovery of the cost of these investments and other elements of Ameren Missouri’s costs to serve its customers,” Ameren officials said in a filing last month, reported on by the St. Louis Business Journal.
Ameren Missouri currently earns a 9.53% return on its investments, but is supporting legislation that would alter the process and lower its rate of return to 9.45%—though it could go higher if the utility meets certain goals.
At a March hearing before the state's House Energy and the Environment Committee, Missouri Public Service Commission Staff Director Natelle Dietrich said the new rate-setting procedure would be a “radical departure” from the status quo. She also warned it could potentially result in a 62% rate hike for residential customers over the next decade. Other large industrial customers could see rates rise 50% to 90%.
Some large consumers support the current system of ratemaking, arguing it is lengthy and imperfect but also empowers regulators to keep prices in check.
