Ameren files request for rate increase

By Patrick Wade

For Champaign and Urbana residents who cringe when they receive an electric bill every month, visits to the mailbox could become more stressful within the year.

Ameren Illinois filed a request with the Illinois Commerce Commission on Nov. 2 asking to raise their energy rates to provide an additional $247 million in annual revenue, according to a company press release. Ameren is a large downstate energy supplier and the primary energy provider for Champaign-Urbana.

The request has Illinois legislators and a leading consumer watchdog group eyeing Ameren.

Ameren spokesperson Erica Abbett said that if the rate hike is approved as requested, it would mean an eight percent increase for a typical gas-electric customer. That is an average $7.75 monthly increase for a customer using a typical 10,000 kilowatt-hours per month. But consumers using electricity to heat their homes could see an extra $11.33 on their monthly bills.

Customers who only use Ameren as their gas company could see an 11.6 percent annual increase, an additional $8.67 on the monthly bill for the average consumer.

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“We do understand there’s no good time to increase prices, and nobody wants to pay higher prices,” Abbett said. She added, however, that the increase is necessary to continue to meet customer expectations.

The Illinois Commerce Commission will review the request – an 11-month process. If the request is approved, the rate increase would take effect no earlier than October 2008, Abbett said.

According to the Ameren press release, the company plans to invest $900 million during the next three years in delivery systems across the utility’s 43,700 square-mile service area.

The company has $14.9 million in improvements slotted for the Champaign-Urbana area in the near future. Abbett said the money will be used for upgraded electrical systems, a new distribution line in Champaign and improvements in the natural gas distribution system.

“You guys are growing like mad in that area, from what I understand,” Abbett said. “We have to continue to build our systems.”

Some Illinois legislators have publicly denounced the Ameren proposal. State Sen. Michael Frerichs, D-Champaign, said “there is a chance” the hike is reasonable, but it is discouraging to see Ameren asking for a rate increase after the recent turmoil the utility caused in the General Assembly.

Lengthy debates in both houses of the Legislature surrounding the possibility of electric rate freezes marked last year’s sessions.

“In light of all the negotiation we did last year, I’m disappointed to see them coming back and asking for a rate hike,” Frerichs said.

The proposed rate increase is also being criticized from skeptics including the Citizens Utility Board, an Illinois consumer watchdog group.

“We have to study the rate hike further,” said Jim Chilsen, spokesperson for the group. “But our experience is the customers often take a back seat to a company’s bottom line.”

The request came less than a year after Ameren was denied most of its last rate increase proposal, according to an Illinois Commerce Commission press release. In November 2006, the commission approved only $97 million in additional revenue for the utility – less than half the $200 million Ameren requested.

The utility appealed, asking for an additional $50 million but was denied by the commission last May. According to the release, Ameren failed to prove that the additional $50 million was justified.

“All Ameren customers should be skeptical about this filing,” Chilsen said. “We’re going to go over every letter and every number of this filing and fight every nickel that isn’t justified.”

Other groups will be working with the Citizens Utility Board to review the filing, Chilsen added.

The Ameren Illinois utilities are “under-recovering” losses incurred from capital investments in their distribution systems, Abbett said.

“The whole question is ‘what does the company need to do to make a healthy profit, not an exorbitant profit, and keep the lights on,'” Chilsen said. “It’s a question of fairness.”