Consumer Coalition Urges State Regulators to Reject $130 Million Ameren Increase, Launches Campaign for Rate Cut

News provided by

Mar 08, 2010, 12:20 ET

CHICAGO, March 8 /PRNewswire-USNewswire/ -- As Ameren Corp.'s push for a $130 million rate hike entered its final weeks, a coalition of consumer advocates on Monday launched a statewide campaign urging state regulators to wipe out the company's proposed increase and instead give customers an overall rate cut.

In news conferences across the state of Illinois, the coalition, including the Citizens Utility Board (CUB), AARP Illinois, and several Illinois legislators, announced its "Roll Back the Rate Hike Campaign" to draft Illinois consumers in the fight against the increase. The Illinois Commerce Commission (ICC) is scheduled to vote on the proposed rate hike in April.

Last month, an ICC judge recommended that the commission grant Ameren's natural gas and electric utilities -- AmerenCILCO, AmerenCIPS, AmerenIP -- an overall $56 million increase. Testimony filed by CUB and the Illinois Attorney General's office, however, calls for an overall $6 million rate cut.

"The ICC judge cut Ameren's increase in half, and that's a step in the right direction, but it doesn't go nearly far enough -- especially in this economy," CUB Executive Director David Kolata said. "Ameren is a healthy company that has more than doubled its Illinois profits. It doesn't need a rate hike, period."

"In this economy, when so many people are struggling to pay their bills, it is unconscionable for Ameren to ask Illinois consumers for a second rate hike, so soon after the increase they received in 2008," said Attorney General Lisa Madigan. "I urge the ICC to put the interests of consumers above Ameren's interests and reject its request for $130 million in increases."

The coalition includes state Rep. Michael Smith, of Canton; state Rep. Eddie Lee Jackson, Sr., of East St. Louis; state Rep. Naomi Jakobsson, of Champaign; state Rep. Jehan Gordon, of Peoria; state Rep. Robert Flider, of Decatur; and state Rep. John Bradley, of Marion. They urged consumers to go to www.StopAmeren.com, which includes a number of ways to contact the ICC, including a petition and a "No Rate Hikes" poster.

"Whether it's $130 million or $56 million, Ameren's rate-hike request is excessive," said Bob Gallo, Senior State Director for AARP in Illinois. "Illinoisans, and especially older adults, are struggling in this recession, and asking them to pay more for the utilities they need is just plain wrong. We want to send a clear message to the ICC: It's time to strike a fair balance between what Ameren wants and what makes sense in this economy, and protect the pocketbooks of Illinois consumers."

In testimony supporting a $6 million rate cut, consumer advocates argued, among other things, that Ameren is seeking an exorbitant return on equity -- or profit rate for shareholders, a key factor in determining customer rates. CUB argued that Ameren should get a 7.97 percent to 8.76 percent return, not the 10.8 percent to 11.7 percent it wants. The ICC judge recommended 9.54 percent to 10.46 percent.

Over the last year, Ameren has sparked frustration among its customers. It asked for the rate hike in June of 2009, less than a year after the ICC had given it a $162 million increase. In November, Ameren CEO Thomas Voss, while speaking at a resort in Hollywood, Fla., reportedly told analysts that reaction to the rate-hike request was "very, very mild," not acknowledging that the night before 150 people -- most against the increase -- had packed an ICC hearing in Decatur.

Last month, Ameren announced that it made $612 million in 2009 and more than doubled the profit for its Illinois utilities, from $51 million to $127 million.

Ameren's proposed rate hike would increase the part of the bill that covers the costs of delivering natural gas and electricity to homes -- plus a profit. These "delivery" charges take up roughly a third of a bill, with the rest covering the cost of the actual electricity or gas.

CUB is Illinois' leading nonprofit utility watchdog organization. It was created by the Illinois legislature in 1983 to represent the interests of residential and small-business utility customers. Since then, CUB has saved consumers more than $10 billion by helping to block rate hikes and secure refunds. For more information, call CUB's Consumer Hotline at 1-800-669-5556 or visit www.CitizensUtilityBoard.org.

SOURCE Citizens Utility Board