Editorial: Utilities keep charging ahead
If timing is everything, the power company that serves much of downstate Illinois might need a better watch. Indeed, Ameren's confirmation of its intentions to seek an increase in its residential delivery service charge couldn't arrive at a more inopportune time.
September was supposed to be a respite for the utility, its one shining moment in a year overcast by a rate relief battle in the state Legislature. With a $1 billion compromise reached last month, Ameren Illinois representatives are hop-scotching downstate, telling customers to expect $140 million in rebates and bill credits. The first rebate checks, worth a minimum of $100 apiece, are being mailed today.
But last week, during a pow-wow of industry analysts in New York City, Ameren Corp. Executive Vice President Warner Baxter said the company's regulated electricity distribution arm needs more money, and Ameren will seek the Illinois Commerce Commission's approval to get it.
Suddenly, those rebate checks aren't so shiny.
Better grab a recent bill. What Ameren will ask for is an increase in its delivery service charge, a separate animal from the rate hikes we've been hearing about since January. See it there, listed as “Distribution Delivery Charge”? AmerenCILCO customers are now paying 2.6 cents per kilowatt hour.
That's not enough, argues Ameren, which cites two reasons for its plans to seek an unspecified increase. One, Ameren Illinois needs investors, and its current rate of return - under 5 percent - is not attractive. Meanwhile, the ICC authorizes a 10 percent rate of return for investors in Ameren Illinois, the umbrella for CILCO, CIPS and IP. By raising the charge, Ameren hopes to lure investment capital.
Two, the delivery service charge helps fund operating costs - wires and equipment, transformers, administrative expenses. A spokesman said the utility needs “additional revenue to invest in the system.” In 2007 alone, Ameren says it budgeted $100 million to maintain and $129 million to improve its power delivery system statewide.
Again, Ameren's timing stinks. Not only did Baxter's statement arrive on the heels of Ameren's legislative fight, it follows Illinois American Water's request for its own rate hike. Moreover, both cases will come before an Illinois Commerce Commission in flux. With one commissioner's seat still unfilled, and two commissioners' terms expiring in January, the governor had best line up some qualified appointees, pronto.
It's too soon to gauge what affect Ameren's request will have on customer bills, as the utility hasn't filed anything yet. When it does, the ICC expects to take 11 months to make a call. It's worth nothing that the last time Ameren sought a delivery service charge hike for its commercial and industrial customers, in 2005, the ICC whittled its request from $200 million to $97 million.
It's also worth noting that, unlike the Citizens Utility Board, which came out swinging over Baxter's statement, an ICC spokesman said the state doesn't care a whit about timing. It will have no bearing on Ameren's case.
We doubt Ameren's exhausted customers feel the same.
Peoria Journal Star