Utility seeks bigger charge

DeWayne Bartels

On Friday, less than a month after AmerenCILCO said electricity bills would drop starting this month, company officials said they will seek a $226 million delivery-rate hike for all Ameren Illinois utilities.

For an AmerenCILCO residential customer using 10,000 kilowatt-hours of electricity annually, the rate hike would amount to a $64.31 annual increase. The expected annual increase in natural gas costs would be $37.84.

On Monday, while meeting with members of the Peoria Times-Observer editorial board, Ameren Illinois president and chief executive officer Scott Cisel said the rate increase is needed to ensure the utility has the necessary resources to provide reliable and safe delivery of electricity and natural gas.

The request will go before the Illinois Commerce Commission. The utility is asking the ICC to approve the rate increase effective May, 2010.

Cisel said maintaining the 46,000-mile electric distribution system and 18,000-mile natural gas distribution system for Ameren’s Illinois utility companies is an expensive proposition.

Seventy-seven percent — more than $173 million — of the $226 million rate increase request, Cisel said, would be spent on construction, operation and maintenance of the energy distribution system.

Customers, Cisel said, rely on the utility to provide efficient and reliable energy delivery service, as to respond quickly and to outages caused by storms and to repair damage.

Cisel said company officials understand the economic challenges their customers are facing. Cisel said he “agonized” over the rate hike request.

But, he added, Ameren Illinois utilities have some economic challenges as well. Those challenges he said have kept him “up nights.”

Cisel said the company implemented cuts of $28 million before seeking this rate hike.

He said the large hurdle the company has not been able to overcome is its bond rating. He said Fitch and Standard & Poor’s rate the company at their lowest rating. He said Moody’s puts their stock at junk bond status. That, Cisel said, means the company has to spend a lot more on interest to borrow money.

“As a utility we are constantly using lines of credit to pay our obligations,” Cisel said.

The company has a $1 billion line of credit spread out over 18 financial institutions.

Cisel said that line of credit is up for renegotiation in January.

Cisel said the company has to have access to so much money because customers pay for the utilities after already using them. He said the company “carries” millions of dollars each month in charges not paid for by customers.

In addition, he said, storm-related costs have played havoc with the bottom line. In ‘08, Cisel said, the company collected $9 million from customers to be used on storm-related costs. The expenditures approached $40 million.

In’09, he said, the company has already paid out $30 million.

Citizens Utility Board executive director David Kolata said Friday he is not pleased with Ameren’s rate increase proposal.

“Ameren’s $226 million rate-hike proposal is a slap in the face to consumers who already are struggling to pay monthly bills during the economic downturn. The ink is barely dry on Ameren’s $160 million rate hike, approved just last year, and the company is back at the table, asking state regulators for a new $226 million increase,” Kolata said.

“The timing couldn’t have been worse. Just this past Monday, Ameren customers got the good news that the rates they pay for the actual electricity they use went down. Now, they hear that Ameren has proposed a $226 million ‘delivery’ rate hike that threatens those gains ... Our legal and policy teams will study every number of Ameren’s proposal and fight every penny that isn’t justified.”