Editorial: AmerenCILCO deserves the benefit of the doubt
Scott Cisel, president and CEO of Ameren Illinois Utilities, looked like a man with a lot on his plate, when seated Monday with members of the Peoria Times-Observer editorial board.
And, he is. Last week, less than a month after AmerenCILCO said electricity bills would drop starting this month, it was Cisel’s face and name attached to a request for a $226 million delivery-rate hike for all Ameren Illinois utilities.
The average AmerenCILCO customer will see an increase of about $100 starting in May 2010 if the request is approved.
There is no guarantee of approval. Citizens Utility Board executive director David Kolata said he is poised to fight.
“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. “Our legal and policy teams will study every number of Ameren’s proposal and fight every penny that isn’t justified.”
More power to that effort.
AmerenCILCO should have to justify every penny, especially in a period of economic downturn.
But, it sounds as if Cisel is prepared to do just that. When the rate increase request was delivered to the Illinois Commerce commission, last week, it took a semi to deliver it. The request consisted of 1.2 million sheets of paper. It sounds like the utility has done its homework.
“This is not going to be pleasant,” Cisel conceded to the editorial board.
Cisel made a case for his position. He said maintaining a 46,000 mile electric distribution system and 18,000 mile natural gas distribution system 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.
Ameren Illinois utilities have some serious economic challenges. The company, Cisel said, has implemented cuts of $28 million before seeking this rate hike. He said a large burden on the company is its bond rating.
“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. That line of credit is up for re-negotiation in January.
In addition, he said, storm-related costs have hurt 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 2008 and the company has already paid out $30 million this year.
Unlike most businesses, Ameren CILCO delivers its product before receiving payment.
And, unlike most businesses, it has little recourse when customers can’t pay their bills.
Without the funds to maintain the complicated infrastructure, no one will be served.
Cisel, and Ameren, deserve a fair hearing from the public, the Illinois Commerce Commission and the Citizens Utility Board. Jumping to conclusions without all the facts will serve no one.
No one wants a rate hike. But, everyone wants reliable service. That costs money.
Let’s hear them out and decide if the rate hike is justified by our own needs.