Noranda gets rate cut, other Ameren consumers see increase
JEFFERSON CITY, Mo. (KFVS/AP) - About 1.2 million customers of Ameren Missouri will see bigger bills for electricity but the utility's largest customer will pay a lower rate.
The Missouri Public Service Commission approved a plan Wednesday to allow St. Louis-based Ameren to increase electric rates while cutting the amount paid by Noranda Aluminum Inc.
Noranda operates a smelter in southeast Missouri. Company officials have warned that it may shut down if it cannot secure lower electricity costs.
Commission chairman Robert Kenney says some of the costs of Noranda's lower rate are shifted to other consumers. But he says the increase is less than the amount that other consumers would have to pay if Noranda shut down entirely.
"Ameren's remaining customers would pay less than they would have paid had Noranda left Ameren's system entirely,” PSC Chairman Robert Kenney said during the hearing.
In a news release, the Missouri Public Service Commission says it has determined that Ameren Missouri should receive a rate increase to reflect the company's increased costs of providing service to its customers.
The decision cuts Ameren Missouri's July 3, 2014 original rate request by more than half.
According to information filed by the commission, the order grants a rate increase of approximately $121.5 million-approximately $142 million less than what the company requested in its July 2014 filing.
The Commission's decision authorized a return on equity of 9.53 (Ameren Missouri's current ROE is 9.8 percent) and there will be no increase in the fixed charge on customer bills.
When Ameren Missouri filed its rate request with the Public Service Commission on July 3, 2014, it sought to increase annual electric revenues by approximately $264 million; an ROE of 10.4 percent and an increase in fixed charges on residential customers' monthly bills from $8.00 to $8.77.
The PSC Staff estimates the impact of the rate increase on a typical residential customer of Ameren Missouri will be approximately $5.45 a month.
The commission also approved an agreement which exempts qualifying low-income customers from having to pay the monthly Energy Efficiency Investment Charge (EEIC) that appears on monthly customer bills. A typical residential customer currently pays an EEIC of approximately $6 a month.
Under the rate case decision, the commission granted a special load retention rate for
Noranda Aluminum, Inc., Ameren Missouri's largest customer.
The lower rate is intended to make it more likely that Noranda stays on the system and makes a contribution to Ameren Missouri's fixed costs.
Other customers, the commission said, will pay less on their own rates if Noranda stays on the system at a lower rate than if the aluminum smelter closed and the fixed costs Noranda currently pays were reapportioned to other Ameren Missouri ratepayers.
“It is important to understand that a customer in St. Louis who has no connection to the Bootheel, will pay higher electric rates if Noranda closes its smelter,” said the Commission. “Right now, Noranda pays a large portion of Ameren Missouri's fixed costs, costs that will not go away just because Noranda no longer buys electricity. If Noranda closes its smelter, those costs will still be there, but then all Ameren Missouri's other customers will have to pick up the bill for those fixed costs. Thus, Ameren Missouri's other customers will benefit from retaining Noranda's load for Ameren Missouri.”
“Consumers won in the Public Service Commission's ruling in the Ameren Missouri rate case. Although the commission granted Ameren a small rate increase, it authorized a lower profit for the monopoly company, denied it special charges it has been granted in the past and will not let it add extraneous costs to the fuel adjustment clause. But perhaps the biggest win is keeping the fixed residential customer charge at $8, bucking a national trend to raise that basic charge dramatically. In addition, we had concluded that consumers will ultimately pay less with Noranda on the system. We are pleased the PSC recognizes that too. After multiple years of Ameren's excessive rate increases, the PSC gives welcome relief to consumers with this decision.” said Joan Bray, executive director of Consumers Council of Missouri.
The Commission's vote was 4 -1.
Chairman Robert Kenney and Commissioners William Kenney, Daniel Hall and Scott Rupp voted yes, Commissioner Stephen Stoll dissented.
Ameren Missouri provides electric service to approximately 1.2 million customers in the state.
Copyright 2015 KFVS. All rights reserved. The Associated Press contributed to this report.