From Illinois Business Journal news services
Ameren Illinois on Wednesday was granted about $150 million in electric and gas delivery rate hikes, less than it had requested but more than it needed, says a citizens watchdog group that plans to appeal the decisions.
Beginning in 2016, the updates will add an expected $2 to $6 per month to typical residential natural gas bills and $2 to $7 per month to typical residential electric bills, Ameren said.
The Illinois Commerce Commission voted 4-1 to give Ameren a $44.5 million, 12.44 percent natural gas rate hike. Ameren originally requested an increase of about $53 million.
The Citizens Utility Board argued that the company couldn’t justify any more than about half that amount.
The ICC voted 5-0 to give Ameren electric customers a $105.8 million, 11.44 percent rate hike. The company had originally requested about $110 million.
Ameren determines electric delivery rates by formula, under the “Energy Infrastructure and Modernization Act,” or the “smart-grid bill,” passed by the Illinois General Assembly in 2011. The law uses a formula to determine Ameren rates annually to pay for about $600 million in power-grid upgrades. Under the new system, regulators and consumer advocates are limited in how much they can reduce rate hikes. CUB fought for at least $10 million in reductions
“While we are pleased Ameren didn’t get as much as it wanted, CUB is disappointed that Ameren still received more than it proved it needed or deserved,” Executive Director David Kolata said. “For Central and Southern Illinois consumers, receiving news like this is akin to receiving a big lump of coal this holiday season.”
CUB plans to file petitions for rehearing to challenge both rate hikes before the Illinois Commerce Commission, he said.
Ameren received the higher electric rates to pay for major upgrades to its power grid.
“If done right, these upgrades should pay for themselves through customer benefits in the long run. CUB will continue to push Ameren to build a more reliable and less costly power grid. Customers are paying the bill for these upgrades, so we deserve the benefits” Kolata said in a release.
The gas ruling gave Ameren a return on equity (profit rate for shareholders) of 9.6 percent; the electric ruling gave the company a return on equity of 9.14 percent.
The rulings affect “delivery” rates, which is what Ameren charges to deliver gas and electricity to homes. Those charges are a third to a half of a bill.
Marcelyn Love, a spokeswoman for Ameren Illinois, said previously that Ameren is upgrading the state’s natural gas delivery system and improving reliability, which supports Illinois’ future economic growth and hundreds of jobs in central and southern Illinois.
“We are sensitive about costs for our customers and offer several programs to help customers manage their energy use and save money,” she told the Illinois Business Journal at the time of the gas filing in February.
The rate hikes will go into effect Jan 1, 2016.
Love said Ameren Illinois is required to undergo an extensive regulatory review to prove that its costs and planned capital investments are prudent and reasonable under Illinois law.
“Ameren Illinois’ gas storage and price hedging strategies are helping keep the costs of natural gas supply lower for Illinois customers,” she said earlier.
The average rate for Ameren Illinois residential electric customers is expected to remain below the national average. Natural gas customers are expected to benefit from lower gas supply costs this heating season, which are down 20 percent from last year.