Heavy Pressure on Ameren as Gas Rate Hike Faces Opposition
Consumer Advocacy Groups Challenge Ameren's Gas Rate Hike
The push by Ameren Illinois to achieve the largest profit rate among gas utilities in the state has drawn significant criticism from consumer advocacy groups, including the Citizens Utility Board (CUB) and Illinois PIRG. They contest the recently proposed rate-hike request amounting to $134 million, deeming it excessive and unjustifiable.
Raising Concerns Over Rate Hikes
According to recent testimonies, Ameren's request is approximately three times higher than what can be legally justified. CUB filed recommendations urging the Illinois Commerce Commission (ICC) to scrutinize and reject about $55.8 million related to unfair overcharges in the utility's proposal. This stances against skyrocketing profit rates for shareholders and the utility's attempts to impose legal costs on consumers for these repeated rate-hike attempts are strong.
Impact on Consumers
CUB's Executive Director, Sarah Moskowitz, expressed concern over how Ameren's requests threaten the affordability of gas services for residents. The advocacy group aims to rally support from consumers to oppose this hike effectively. The testimony indicates that if the Illinois Attorney General's recommendations are adopted, significant cuts could leave Ameren with a reduced request of $85.3 million, signifying a nearly two-thirds reduction.
Recent Trends in Ameren's Profitability
This marks Ameren's fourth hike request since 2018, during which delivery rates rose by $202 million—a staggering 50% increase. Over this time frame, Ameren's profits have grown by 45%, culminating in over $6.9 billion in earnings. Notably, Ameren Illinois' gas segment has experienced more than a doubling of its profits.
Proposed Rate Hikes and Consumer Impact
In January, Ameren sought a gas rate hike of $134.4 million as part of an 11-month rate case process. This request could culminate in an increase of approximately 12 to 13 percent in monthly residential bills, translating to an added cost of $8 to $10 monthly for customers. The aggressive push from Ameren has left consumer advocates worried about the rising costs.
Evaluating Rate Structures and Profitability
Consumer organizations like CUB and IIEC have engaged expert consultants to evaluate Ameren’s proposal. Their analysis highlights several areas needing adjustments:
Recommendations from Consumer Advocates
Two significant points of concern arise regarding Ameren's proposed profit rate for shareholders. Ameren's suggested return on equity (ROE) hike would elevate it from 9.44 percent to 10.7 percent. CUB has countered this with a proposed rate of 9.45 percent, which could potentially decrease the rate hike by $30.6 million.
Challenges in Capital Structure
Additionally, CUB's evaluation indicates issues with the utility's capital structure, specifically its financing of infrastructure projects. Ameren seeks to raise its common equity ratio to 52 percent. CUB argues for maintaining the current rate of 50 percent, proposing that this adjustment could further decrease the rate hike by $5.9 million.
Concerns Over Legal Fee Recoveries
Under state regulations, utilities are allowed to recover legal costs related to rate cases. This raises significant concerns about consumer burden since the current structure may lead to customers being double or even triple charged for certain legal fees. CUB estimates rectifying this could result in an additional reduction of $1.7 million from the proposed increase.
Cost Misestimations and Their Impacts
In addition, CUB voiced concerns regarding Ameren's forecasts for gas sales and cash working capital, which influences the utility’s overall service costs. Their analysis suggests that Ameren's current projections overestimate the time frame it takes for customers to settle their bills, which could undercut operational efficiencies further.
Future Developments on Rate Decisions
Further expert recommendations from EDF and Illinois PIRG advocate reviews of Ameren’s planned transmission spending, projecting cuts of up to $84 million due to insufficient justification for their proposed expenses. The ICC is expected to make a ruling on the rate hike request soon—approximately around November—with changes likely being implemented shortly thereafter.
Ameren's Client Base
Ameren Illinois currently supplies gas to about 816,000 customers residing in central and southern areas of the state. As the community reacts to these ongoing negotiations, consumer groups are determined to ensure that customer interests are prioritized in the rate-setting process.
Frequently Asked Questions
What is Ameren's latest gas rate hike request?
Ameren's latest request seeks a gas rate hike of $134 million, which is being heavily contested by consumer advocacy groups.
What are the main objections to the rate hike?
Critics argue that the proposed hike is excessive and not legally justified, with calls for reductions citing financial burdens on consumers.
How much could residential bills increase?
If approved, monthly residential bills may rise by 12 to 13 percent, amounting to an additional $8 to $10 per month.
What has been Ameren's profit trend in recent years?
Ameren has raised delivery rates by 50% since 2018, while simultaneously increasing its profits by 45%, amounting to $6.9 billion.
What role does CUB play in this situation?
The Citizens Utility Board (CUB) advocates for consumer rights and is actively pushing for reductions to Ameren's proposed rate hike, aiming to protect consumers from excessive charges.
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