New Missouri law authorizes Ameren to invest $1B, cuts rates

Dive Brief:

A new Missouri law authorizes Ameren to spend $1 billion over the next five years on grid upgrades, while also lowering customer rates roughly 5% and then capping them for at least two years.
Senate Bill 564, signed earlier this month, allows for the speedy return of more than $100 million annually in federal tax savings to Ameren Missouri customers. While Ameren rates are frozen until April 2020, the new law also imposes rate caps over the next five years, limiting any increases to 2.85% from the electricity rates established in April 2017.
In other Missouri energy developments, Ameren filed a six-year, $550 million energy efficiency proposal with state regulators last week.

Dive Insight:

Missouri has faced criticism for a difficult regulatory environment, and an investment of this size in the state's electric grid is significant. When the Senate approved SB 564 last month, it moved Morningstar analysts to raise Ameren's share-price valuation, and utility officials celebrated the upper chamber passage in their Q4 2017 earnings call.

The law "will support our ability to invest an incremental $1 billion in infrastructure through 2023 that will drive significant long-term benefits to customers and create good-paying jobs as well as earn fair returns on those investments," Warner Baxter, Ameren Chairman, President and CEO, said during the call.

With the bill now signed, utility officials say it is a win for customers as well.

"For years our customers have expressed a desire for more stable and predictable energy bills, as well as a modernized electric grid that is smarter and more resilient to outages," Ameren Missouri President Michael Moehn said in a statement.

The bill cuts rates using federal tax savings, freezes rates for at least two years, and makes any ensuing increases more predictable. The law also authorizes Ameren to allocate $14 million to utility-owned solar by 2023 and provides up to $28 million in solar rebates for customers, starting in 2019.

Ameren's full modernization plan will be submitted to the Missouri Public Service Commission next year, the utility said.

"The rate cuts and caps signed into law will allow businesses to grow, while the economic development incentives included in SB 564 will further enhance Missouri's reputation as a low-cost energy state," Missouri Chamber of Commerce CEO Daniel Mehan said in a statement.

The state's energy policies has been driving other investments, such as Ameren's energy efficiency programs proposed under the Missouri Energy Efficiency Investment Act. Aiming to save 2 billion kWh, the programs would run from 2019 through 2024 with annual expenditures of almost $92 million.